CIC Consolidated - cicorp.sk.capub/2019-20_CIC_AR_Consolidated.pdf · CIC CONSOLIDATED CIC Consolidated Management . Discussion & Analysis. ... Above: SaskEnergy Customer Solutions

38 CIC Consolidated

CIC Consolidated

CIC Annual Report 2019-20 39

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CIC Consolidated Management Discussion & AnalysisPrefaceThe purpose of the following discussion is to provide the users of CIC’s financial statements with an overview of the corporation’s financial performance and the various measures CIC uses to evaluate its financial health. The following analysis of CIC’s consolidated 2019-20 financial results should be read in conjunction with the audited consolidated financial statements. For purposes of CIC’s consolidated MD&A, “CIC” and “Corporation” refer to the consolidated entity. The Corporation’s consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and, as such, consolidate the results of all of the Corporation’s subsidiary corporations.

Producing two different views of CIC’s operations and results, with consolidated and separate financial statements, is the cornerstone of our commitment to accountability and transparency. Explanations of the differing purposes of these statements are provided in the following pages.

In addition to the information on CIC’s 2019-20 results, the following discussion also provides detailed information regarding performance relative to the business plan, and how it affects the CIC Crown sector in the future.

In 2015, the Corporation was directed by the provincial government to change its fiscal year end from December 31 to March 31 to coincide with that of the Province of Saskatchewan. Therefore, 2015-16 information included in the consolidated MD&A is for the fifteen months ended March 31, 2016.

Forward-Looking InformationThroughout the annual report, and particularly in the following discussion, forward-looking statements are made. These statements can be recognized by terms such as “outlook,” “expect,” “anticipate,” “project,” “continue,” or other expressions that relate to estimations or future events. By their nature, forward-looking statements require assumptions based on current information, management experience and historical performance. Forward-looking information is subject to uncertainties, and, as a result, forward-looking statements are not a guarantee about the future performance of CIC and its subsidiary Crown corporations.

Readers should not place undue reliance on forward-looking statements, as a number of factors could cause actual results to differ materially from estimates, predictions and assumptions. Factors that can influence performance include, but are not limited to: global pandemics, weather conditions, commodity markets, general economic and political conditions, interest and exchange rates, performance, competition and regulatory environment. Given these uncertainties, assumptions contained in the forward-looking statements may or may not occur.

40 CIC Consolidated

A Closer View of CIC’s HoldingsThe Corporation is involved in a broad array of industries through various forms of investment. A number of investments are held as wholly-owned subsidiaries, while others are joint ventures and partnerships held through CIC’s wholly-owned subsidiaries.

Investment Major Business Line

Utilities:

Saskatchewan Power Corporation (SaskPower) Electricity

Saskatchewan Telecommunications Holding Corporation and Saskatchewan Telecommunications (collectively SaskTel)

Information and communications technology

SaskEnergy Incorporated (SaskEnergy) Natural gas storage and delivery

Saskatchewan Water Corporation (SaskWater) Water and wastewater management

Insurance:

Saskatchewan Government Insurance (SGI CANADA) Property and casualty

Entertainment:

Saskatchewan Gaming Corporation (SGC) Gaming

Investment and Economic Growth:

CIC Asset Management Inc. (CIC AMI) Investments

Saskatchewan Opportunities Corporation (SOCO) Research Parks

Saskatchewan Immigrant Investor Fund (SIIF) Construction loans

Profiles of material subsidiary corporations are included in this section. Each subsidiary Crown corporation prepares an annual report, which is tabled in the legislative assembly.

The data on the following page illustrates the importance of the utility and insurance business segments to the financial results of the Corporation. Of these corporations, SaskPower, SaskTel, SaskEnergy and SGI CANADA are the most significant in terms of assets, liabilities, and operating earnings generated.

Dress for Success is a volunteer-led, not-for-profit organization that give women in our community the chance to realize their full potential, achieve financial independence and break the cycle of poverty. CIC supports Dress for Success’s annual fundraising gala, as well as through volunteer contributions from staff.


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SaskEnergy’s Tune-Up Assistance Program (TAP) promotes the importance of annual home heating equipment maintenance and

carbon monoxide detection. In 2019-20, TAP completed its third year of providing qualifying low-income homeowners with free furnace maintenance, a carbon

monoxide alarm, two free furnace filters, and up to $100 in repairs. Through TAP, SaskEnergy and its Network of plumbing and heating contractors have helped

400 customers in 31 communities across the province achieve greater energy efficiency in their homes while also reducing their environmental impact.

Above: SaskEnergy Customer Solutions Leader Sam Gross (left) hands a customer her natural gas and carbon monoxide detector, which was provided through the Tune-Up Assistance Program.

42 CIC Consolidated

Understanding CIC’s Financial StatementsCIC prepares two sets of financial statements: consolidated financial statements and separate financial statements.

CIC Consolidated Financial StatementsThese statements illustrate CIC’s results consolidated with the results of its subsidiary corporations. The financial statements are prepared in accordance with IFRS and include:

• financial results of subsidiary Crown corporations (SaskPower, SaskTel, SaskEnergy, SGI CANADA, SGC, SaskWater, and SOCO);

• financial results for CIC’s wholly-owned subsidiaries (SIIF, CIC AMI, First Nations and Métis Fund Inc., and CIC Economic Holdco Ltd.);

• dividends and equity repayments paid by CIC to the General Revenue Fund (GRF); and• CIC’s operating results and public policy expenditures.

Consolidated earnings represent the total earnings in the Crown sector, taking into consideration the elimination of all inter-entity transactions (i.e. revenues and expenses between Crown corporations and dividends paid by Crown corporations to CIC).

CIC Separate Financial StatementsThese statements represent CIC’s earnings as the shareholder of the Saskatchewan commercial Crown sector. They assist CIC in determining its capacity to pay dividends and equity repayments to the GRF. The separate statements have been prepared in accordance with IFRS. These statements are intended to isolate the holding company’s cash flow, capital support for certain subsidiary corporations, and certain public policy expenditures. These financial statements include:

• dividends from subsidiary corporations and investments; • dividends and equity repayments paid by CIC to the GRF;• grants by CIC to subsidiaries; and• CIC’s operating results and public policy expenditures.

In January 2020, SGI signed the Saskatchewan Chamber of Commerce’s Indigenous Engagement Charter. Vicky Cullen, VP of Human Resources, sat in the middle of the table, surrounded by other business leaders as she signed the charter on behalf of SGI. A drum circle also performed at the event.


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CIC’s 2019-20 Financial Highlights

(millions of dollars)

2019-202018-19

(Restated) 2017-18 2016-17

Fifteen months

2015-16

CIC Consolidated

Net earnings $ 435.4 $ 540.6 $ 503.0 $ 398.6 $ 342.0

Assets 20,625.5 19,793.6 18,965.4 18,065.3 17,402.4

Debt1 10,342.2 9,795.3 9,416.8 9,037.5 8,671.3

Dividend to the GRF 250.0 256.0 205.0 219.0 297.2

Debt ratio 61.1% 60.6% 61.7% 62.7% 63.2%

Return on equity 7.6% 9.9% 9.9% 8.4% 7.4%

CIC Separate

Dividend revenue $ 230.2 $ 243.1 $ 233.5 $ 157.4 $ 184.4

Net earnings 212.5 235.3 213.1 132.1 153.5

Cash return on equity 20.6% 19.8% 15.8% 16.4% 20.5%

1 Consolidated debt includes long-term debt, long-term debt due within one year, and notes payable.

Consolidated Net Earnings Consolidated Return on Equity

0 100 200 300 400 500 600

Fifteen months 2015-16

2017-18

$ Millions

2019-20

2018-19

$435.4 MILLION

2016-17

0%

2%

4%

6%

8%

10%

12%

7.6%

Fifteen months2015-16

2016-17 2017-18 2018-19 2019-20

Separate Net Earnings Dividends to the GRF

0 50 100 150 200 250


2017-18

$ Millions

2019-20

2018-19

2016-17

$212.5 MILLION

0

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100

150

200

250

300$250.0

MILLION2018-19

Fifteenmonths2015-16

2016-17

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2017-18 2018-19 2019-20

44 CIC Consolidated

Significant Events Impacting 2019-20 Consolidated ResultsDuring 2019-20, the following significant events impacted the Corporation’s consolidated results:

1. Adoption of IFRS 16, LeasesEffective April 1, 2019, the Corporation adopted IFRS 16, Leases which provides principles for the recognition, measurement, presentation and disclosure of leases. The standard removed the distinction between operating and finance leases and introduced a single, on-balance sheet accounting model requiring lessees to recognize right-of-use assets and lease liabilities. The Corporation elected to adopt IFRS 16 using the modified retrospective approach on transition. Comparative information has not been restated and continues to be reported under IAS 17. Adoption of IFRS 16 resulted in an increase to assets and liabilities of $86.2 million; however, it did not result in any material impact to net earnings for the year ended March 31, 2020.

2. Capital ExpendituresDuring 2019-20, the Corporation spent $1,325.4 million on capital expenditures related to investing in aging infrastructure and meeting the demand for growth. Additional debt of $546.9 million was incurred in 2019-20 primarily to fund a portion of the capital expenditures. The remainder of capital expenditures are funded primarily through cash from operations.

3. COVID-19The COVID-19 pandemic has caused material disruption to businesses and has resulted in an economic slowdown. The Corporation has assessed and continues to monitor the impact of COVID-19 on its operations. The magnitude and duration of COVID-19 is uncertain and, if it causes significant disruption for an extended period of time, the impacts to the Corporation will increase. Potential impacts include loss of revenue, supply chain disruption, challenges associated with a remote or unavailable workforce and potential asset impairment.

Two identifiable factors that impacted the current year as a result of the COVID-19 pandemic were Crown corporations incurring higher than normal expenses based on estimated receivables that will be uncollectible and an impairment loss incurred by DirectWest on declining market services revenue and the related future cash flows.

Accounting Policy Developments Impacting Future Consolidated Results As disclosed in Note 4(t) in the consolidated financial statements, a number of new accounting standards and amendments to standards and interpretations are not yet effective for the period ended March 31, 2020 and have not been applied in preparing the consolidated financial statements. Note 4(t) includes management’s assessment of the potential impacts on the consolidated financial statements known at this time.

$435.4 MILLIONConsolidated net

earnings in 2019-20


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Analysis of Consolidated Net Earnings

(millions of dollars)

2019-20 2018-19 2017-18 2016-17

Fifteen months

2015-16

SaskPower $ 205.8 $ 197.0 $ 145.5 $ 56.3 $ 25.9

SaskTel 119.8 127.4 121.0 134.8 126.7

SGI CANADA 49.9 48.0 59.4 65.2 84.5

SaskEnergy 43.5 165.7 143.5 145.6 110.9

SGC 20.1 22.5 23.2 24.4 32.7

SaskWater 8.4 7.5 8.1 6.5 7.3

SOCO 3.0 3.5 5.6 0.5 1.6

STC - - 26.6 (5.3) 0.3

SIIF 7.1 (2.2) (1.1) (1.4) (2.4)

CIC AMI 2.2 (6.0) (2.6) (3.0) 4.6

CIC (Separate) 212.5 235.3 213.1 132.1 153.5

Other1 (236.9) (258.1) (239.3) (157.1) (203.6)

Consolidated net earnings $ 435.4 $ 540.6 $ 503.0 $ 398.6 $ 342.0

1 Includes First Nations and Métis Fund, CIC Economic Holdco Ltd., and consolidation adjustments. Consolidation adjustments reflect the elimination of all inter-entity transactions, such as grants from CIC to Crown corporations, revenues and expenses between Crown corporations, and dividends paid by Crown corporations to CIC.

Changes in Consolidated Net Earnings

Consolidated net earnings for 2019-20 were $435.4 million (2018-19 - $540.6 million) or $105.2 million lower than the same period in 2018-19. The decrease was primarily related to decreased earnings at SaskEnergy.

200

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541

9

(122) (8)

2 13

435

2018-19 SaskPower SaskEnergy SaskTel SGI CANADA Other 2019-20

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46 CIC Consolidated

Analysis of Consolidated Revenues and Expenses

RevenueRevenue was $5,924.0 million for 2019-20 (2018-19 - $5,877.3 million), an increase of $46.7 million. This was primarily a result of increased revenues at SaskPower and SGI CANADA partially offset by decreased revenues at SaskEnergy.

Changes in Revenue

SaskPower revenue increased by $52.7 million primarily due to an increase in Saskatchewan electricity sales as a result of the implementation of the federal carbon charge effective April 1, 2019 and increased customer contributions for the cost of service extensions. This was partially offset by lower sales volumes (down 2.1 per cent from the prior year) and decreased export sales due to decreased opportunities to sell into Alberta as a result of a Saskatchewan-Alberta tie-line outage from June through August.

SaskEnergy revenue decreased by $116.9 million primarily due to a commodity rate decrease effective April 1, 2019 and decreased gas marketing activity due to unfavourable market conditions. This was partially offset by increased transportation revenue as a result of growth in the province driven by expansion in the oil and power generation sectors.

SGI CANADA revenue increased by $106.2 million primarily due to increased premiums in Saskatchewan, Ontario, and British Columbia. Saskatchewan experienced rate increases to offset increased claim costs and inflation. Ontario experienced growth in personal lines and personal auto policies written. British Columbia premiums written increased due to new broker partnerships.

Operating and Net Finance ExpensesTotal operating and net finance expenses (including discontinued operations) for 2019-20 were $5,500.0 million (2018-19 - $5,351.3 million), an increase of $148.7 million from the same period in 2018-19. This was primarily due to increased operating costs, depreciation and amortization, and net finance expenses.

4,500

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2018-19 SaskPower SaskEnergy SaskTel SGI CANADA Other 2019-20

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Analysis of Consolidated Revenues and Expenses (continued)

Changes in Total Operating and Net Finance Expenses

Operating CostsOperating costs increased by $31.0 million to $2,872.9 million for 2019-20 (2018-19 - $2,841.9 million) primarily due to increases at SaskPower and SGI CANADA which was partially offset by a decrease at SaskEnergy.

SaskPower operating costs increased primarily due to increased fuel and purchased power costs as a result of the introduction of the federal carbon charge. This was somewhat offset by increased use of lower-cost fuel sources and reduced demand.

SGI CANADA operating costs increased primarily as a result of customer growth in all jurisdictions which is reflected by the increase in revenue. This growth led to higher commissions, increased claims, and higher administrative expenses.

SaskEnergy operating costs decreased primarily due to lower commodity purchases as a result of warmer weather than in 2018-19 and lower asset optimization purchases as a result of limited market opportunities.

Depreciation and AmortizationDepreciation and amortization increased by $46.4 million to $927.6 million for 2019-20 (2018-19 - $881.2 million) primarily due to additional investments in property, plant and equipment at SaskPower, SaskTel and SaskEnergy as well as adjustments to the estimated useful lives of certain asset components at SaskPower.

Net Finance ExpenseNet finance expense increased by $48.2 million to $501.0 million for 2019-20 (2018-19 - $452.8 million) primarily due to increases at SaskPower and SGI CANADA.

SaskPower net finance expense increased as a result of the repayment of non-recourse debt and penalties associated with the Cory Cogeneration Station and higher interest due to additional long-term borrowing required to finance capital expenditures.

SGI CANADA net finance income decreased as a result of increased volatility in the last quarter due to COVID-19, causing significant negative equity returns.

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2018-19 Operating costs

Salaries, wages and employee

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Other 2019-20

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Depreciationand

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Net �nanceexpenses

48 CIC Consolidated

Analysis of Consolidated Capital Resources

Consolidated DebtThe Corporation closely monitors the debt levels of its subsidiaries, utilizing the debt ratio as a primary indicator of financial health. The debt ratio measures the amount of debt in a corporation’s capital structure. Too high a ratio relative to target, which is determined according to industry standards, indicates a debt burden that may impair a corporation’s ability to withstand downturns in revenues and still meet fixed payment obligations. The ratio is calculated as net debt divided by capitalization at the end of the period.

The Corporation reviews the debt ratio targets of all its subsidiary Crown corporations on an annual basis to ensure comparability with industry standards. This review includes subsidiary Crown corporations’ plans for capital spending over the medium term. The target debt ratios for subsidiary Crown corporations are benchmarked to industry and reviewed and approved by the CIC Board of Directors. The Corporation uses targeted debt ratios to compile a weighted average debt ratio for the Crown sector. The target ratio for 2019-20 was 61.8 per cent.

For further information on the Corporation’s approach to capital management, refer to Note 25 of the audited consolidated financial statements.

The following table shows the Corporation’s consolidated debt level and debt ratio:

2019-20 2018-19 2017-18 2016-17 2015-16

Consolidated debt $10,342.2M $9,795.3M $9,416.8M $9,037.5M $8,671.3M

Consolidated debt ratio 61.1% 60.6% 61.7% 62.7% 63.2%

Consolidated debt ratio target 61.8% 62.1% 62.8% 62.7% 61.6%

Debt on a consolidated basis was $10,342.2 million at March 31, 2020 (2018-19 - $9,795.3 million) or an increase of $546.9 million from March 31, 2019. The increase is primarily attributed to higher debt at SaskPower ($254.1 million), SaskTel ($101.8 million), and SaskEnergy ($197.5 million). The increase in debt was primarily required to fund a portion of the $1,325.4 million in 2019-20 capital expenditures needed to sustain infrastructure and meet the demand for growth. Debt decreased by $21.4 million at SIIF due to principal loan repayments to the Government of Canada pursuant to the Immigrant Investor Program (IIP).

Over the last five periods, consolidated debt has increased $1,670.9 million in support of increased assets of $3,223.1 million.

Capital SpendingCapital spending (property, plant and equipment, investment property and intangible asset purchases) decreased $110.5 million to $1,325.4 million for 2019-20 (2018-19 - $1,435.9 million). Major capital expenditures included:

• $695.7 million at SaskPower related to generation, transmission and distribution projects including the E.B. Campbell Life Extension, completion of the Chinook Power Station, increasing grid capacity, connecting customers to the electric system, and sustaining infrastructure;

• $258.7 million at SaskTel for Fibre to the Premises, wireless network enhancements, basic network growth and enhancements;

• $328.1 million at SaskEnergy primarily related to customer connections, system expansions to meet customer growth, and spending to ensure the safety and integrity of its extensive distribution and transmissions systems; and

• $24.0 million at SaskWater primarily related to new customer assets (including the substantial completion of the Melville water treatment plant and the purchase of the Meadow Lake water treatment plant assets), system upgrades, and infrastructure replacement programs.

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2015-16 2016-17

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2017-18 2018-19(Restated)

2019-20

$20.6 BILLION

$10.3 BILLION

Total Assets Consolidated Debt


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SaskWater’s operations team holds diverse levels of certification for water and wastewater systems. This expertise supports SaskWater’s customers across the province by helping to optimize infrastructure design and operations.

50 CIC Consolidated

“Be a Good Wingman” ads encouraged a safe ride

home from Saskatchewan

Rush games.

A group of children with Bucklebot, SGI’s latest car seat safety ambassador.

SGI employees took part in Orange Shirt Day, a designated day to increase awareness about the individual, family, and community inter-generational impacts of Indian Residential Schools.

SGI held a celebration of Chinese New Year for employees, celebrating our diversity.

A colourful troop of SGI employees and their families took

part in the 2019 Queen City Pride Parade.

“Be a Good Wingman” ads encouraged a safe ride

home from Saskatchewan

Rush games.

SGI employees took part in Orange Shirt Day, a designated day to increase awareness about the individual, family, and community inter-generational impacts of Indian Residential Schools.

SGI CANADA sponsored the Saskatoon Fireworks Festival.

Business Development Account

Manager, Paul Stannard – from

our Edmonton office – was in

the Valentine’s Day spirit. He

sold popcorn to raise funds for

Edmonton’s Food Bank.

An Indigenous “Be a Good Wingman” sign at the Kamsack Curling Club.

SGI CANADA sponsored the Saskatoon Fireworks Festival.

A group of children with Bucklebot, SGI’s latest car seat safety ambassador.

SGI CANADA was proud to support the 2019 Great Big Pumpkin Drop. Proceeds went to Muscular Dystrophy Canada.

Business Development Account

Manager, Paul Stannard – from

our Edmonton office – was in

the Valentine’s Day spirit. He

sold popcorn to raise funds for

Edmonton’s Food Bank.

SGI held a celebration of Chinese New Year for employees, celebrating our diversity.

An Indigenous “Be a Good Wingman” sign at the Kamsack Curling Club.


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Operating, Investing and Financing ActivitiesCash and cash equivalents for 2019-20 increased $206.1 million (2018-19 - $37.7 million) primarily due to increased cash from operating activities, which was somewhat offset by cash used in investing and financing activities. A more detailed discussion of cash flows from operating, investing and financing activities is included below.

Net Change in Cash and Cash Equivalents

Cash Flow Highlights (millions of dollars) 2019-20 2018-19

Net cash from operations $ 1,544.4 $ 1,354.1

Net cash used in investing activities (1,316.2) (1,335.9)

Net cash (used in) from financing activities (22.1) 19.5

Change in cash and cash equivalents $ 206.1 $ 37.7

Operating ActivitiesCash from operations increased by $190.3 million to $1,544.4 million for 2019-20 (2018-19 - $1,354.1 million). The increase is due to increased operating earnings excluding non-cash items and favourable changes in non-cash working capital balances.

Investing ActivitiesCash used in investing activities decreased $19.7 million to $1,316.2 million for 2019-20 (2018-19 - $1,335.9 million) primarily due to a decrease in capital expenditures.

Financing ActivitiesNet cash used in financing activities was $22.1 million in 2019-20, which was a decrease in cash of $41.6 million in comparison to 2018-19 (2018-19 - $19.5 million from financing activities). The decrease was primarily due to decreases in other liabilities (mainly attributable to SaskPower), principal repayments of lease liabilities and a repayment of equity advances to the GRF. These decreases were somewhat offset by increases in long-term debt proceeds and notes payable.

(150) (100) (50) 0 50 100 150 200 250


2017-18

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2018-19

2019-20

2016-17

52 CIC Consolidated

Comparison of Results with Budget (millions of dollars) 2019-20 Earnings 2019-20 CIC Dividends

Budget Actual Budget Actual

SaskPower $ 255.2 $ 205.8 $ 25.5 $ 20.6

SaskTel 129.5 119.8 116.6 107.8

SaskEnergy 63.8 43.5 22.4 23.1

SGI CANADA 59.1 49.9 48.0 54.2

SGC 21.8 20.1 27.5 13.3

CIC AMI 1.0 2.2 - -

SaskWater 6.7 8.4 3.3 4.2

SOCO 2.8 3.0 2.5 2.7

SIIF 5.4 7.1 - -

CIC (Separate) 232.2 212.5 - -

Other1 (245.8) (236.9) 4.3 4.3

Totals $ 531.7 $ 435.4 $ 250.1 $ 230.2

1 Includes First Nations and Métis Fund, CIC Economic Holdco Ltd., and consolidation adjustments. Consolidation adjustments reflect the elimination of all inter-entity transactions, such as grants from CIC to Crown corporations, revenues and expenses between Crown corporations, and dividends paid by Crown corporations to CIC.

The preceding table shows results for the commercial Crown corporations in 2019-20 in comparison to business plan targets. Consolidated earnings for 2019-20 of $435.4 million were $96.3 million lower than budgeted earnings of $531.7 million. Dividends to CIC in 2019-20 of $230.2 million were $19.9 million below budgeted dividends of $250.1 million. Dividend revenue is typically proportionate to the operating earnings of the dividend paying Crown corporations, or in some cases, set on an alternative basis such as cash availability. Accordingly, the dividend variances reported for all subsidiaries primarily relate to earnings fluctuations. Significant earnings variances are explained as follows:

• SaskPower earnings were $49.4 million lower than budget primarily due to a decline in Saskatchewan electricity sales volumes due to reductions in the potash, pulp, pipeline and steel sectors as well as moderate weather conditions during the year and general declines in economic conditions.

• SaskEnergy earnings were $20.3 million lower than budget primarily due to negative market value adjustments on natural gas contracts. Operating earnings (excluding market value adjustments) were $66.1 million, consistent with budget.

• CIC Separate earnings were $19.7 million lower than budget primarily due to lower than expected dividend revenue from subsidiary corporations.

• SGC’s earnings were $1.7 million lower than budget primarily due to the closure of both casinos in March 2020 due to the COVID-19 pandemic. As a result, SGC dividends were not declared at the end of the year and were $14.2 million lower than budget.


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(millions of dollars) Utilities Entertainment Insurance Investment & Economic Other1 Total

2019-202018-19

(Restated) 2019-20 2018-19 2019-20 2018-19 2019-20 2018-19 2019-20 2018-19 2019-202018-19

(Restated)

Statement of Income Total revenue 4,949 5,007 114 119 963 857 41 41 (137) (141) 5,930 5,883 Operating expenses (4,048) (4,012) (93) (96) (936) (862) (28) (40) 106 112 (4,999) (4,898)Net finance (expenses) income (523) (501) (1) (1) 22 53 - (7) 1 3 (501) (453)

Earnings (loss) from operations 378 494 20 22 49 48 13 (6) (30) (26) 430 532 Share of net earnings from equity accounted investees (1) 3 - - - - - - 6 6 5 9

Net earnings (loss) 377 497 20 22 49 48 13 (6) (24) (20) 435 541

Statement of Financial PositionCurrent assets 1,593 1,309 21 20 664 676 76 38 (12) 49 2,342 2,092 Investments & other 1,834 1,170 5 - 984 892 18 63 73 85 2,914 2,210 Capital assets2 15,177 15,292 58 59 17 19 170 177 (52) (55) 15,370 15,492

18,604 17,771 84 79 1,665 1,587 264 278 9 79 20,626 19,794

Current liabilities 3,003 2,667 19 21 867 807 38 59 (81) (124) 3,846 3,430 Long-term debt 8,413 8,216 - - - - 38 40 - - 8,451 8,256 Lease liabilities 1,027 1,087 5 5 10 - 1 1 - - 1,043 1,093 Other 1,056 947 - - 368 356 60 59 (13) (13) 1,471 1,349

13,499 12,917 24 26 1,245 1,163 137 159 (94) (137) 14,811 14,128 Province’s equity 5,105 4,854 60 53 420 424 127 119 103 216 5,815 5,666

18,604 17,771 84 79 1,665 1,587 264 278 9 79 20,626 19,794

Statement of Cash Flows Operating activities Ongoing operations 1,405 1,227 26 29 107 73 21 9 (15) (4) 1,544 1,334

Operating activities 1,405 1,227 26 29 107 73 21 9 (15) (4) 1,544 1,334

Investing activities Capital asset purchases3 (1,306) (1,412) (11) (9) (4) (7) (4) (8) - - (1,325) (1,436) Other 32 36 - - (45) 10 18 71 4 3 9 120

(1,274) (1,376) (11) (9) (49) 3 14 63 4 3 (1,316) (1,316)

Financing activities Debt proceeds 714 597 - - - - - - - - 714 597 Debt repayments (131) (76) - - - - (22) (71) - - (153) (147) Dividends paid (212) (158) (18) (19) (41) (30) (3) (4) 24 (45) (250) (256) Equity (repaid) received (33) (47) - - - - (1) (1) (66) 48 (100) - Other (236) (173) 5 - (1) - (1) (1) - - (233) (174)

102 143 (13) (19) (42) (30) (27) (77) (42) 3 (22) 20

Change in Cash 233 (6) 2 1 16 46 8 (5) (53) 2 206 38

1 Other includes the operations of CIC (Separate), discontinued operations (see Note 10 of the consolidated financial statements) and consolidation adjustments.2 Capital assets include property, plant and equipment, right-of-use assets, investment property and intangible assets.3 Capital asset purchases include property, plant and equipment, investment property and intangible assets.

Segmented InformationTotal Assets by Business Segment Total Assets by Corporation

Utilities (90.2%)Entertainment (0.4%)Insurance (8.0%)Investment and Economic Growth (1.3%)Other (0.1%)90.2%

Utilities59.2%SaskPower

SaskPower (59.2%)SaskEnergy (15.6%)SaskTel (13.6%)SGI (8.7%)Other (2.9%)

54 CIC Consolidated

2019-20 Financial ResultsNet earnings of $205.8 million increased $8.8 million from the $197.0 million recorded in 2018-19. Excluding the impacts of the federal carbon charge, income was impacted by lower Saskatchewan electricity sales and higher capital-related expenses. This was partially offset by a reduction in fuel costs as a result of increased use of lower-cost fuel sources.

Revenue of $2,786.7 million (2018-19 - $2,734.1 million) increased largely due to the implementation of the federal carbon charge rate rider effective April 1, 2019. The revenue associated with the federal carbon charge rate rider is being set aside and will be used to fund SaskPower’s federal carbon tax payments. This increase was partially offset by lower sales volumes. Electricity sales volumes to Saskatchewan customers were 23,072 GWh, down 487 GWh or 2.1 per cent compared to the prior year as a result of reduced activity in the residential, potash, pulp, pipeline and steel sectors and moderate weather conditions.

Expenses of $2,579.8 million (2018-19 - $2,540.0 million) increased mainly due to higher fuel and purchased power costs as a result of the implementation of the federal carbon charge, offset by reduced demand from lower generation volumes as well as increased use of lower-cost fuel sources as more hydro was available for use. Capital-related expenses, including depreciation, finance charges and taxes, increased as a result of SaskPower’s capital program which is focused on generation, customer connections and sustaining transmission and distribution infrastructure. Other expenses decreased as a result of a prior year adjustment to the environmental remediation provision based on estimated settlement costs for past activities. Operating expenses decreased compared to 2018-19 due to lower material and contract service costs related to transmission and distribution infrastructure as a result of less storm activity during the period. This was partially offset by additional overhaul activity at generation facilities.

Gross long-term debt, short-term debt, and finance leases of $8,262.9 million (March 31, 2019 - $8,105.8 million) increased due to additional borrowings during the year to finance capital expenditures. SaskPower invested $695.7 million (2018-19 - $825.6 million) in various capital projects, including new generation such as the Chinook Power Station, customer connects, and sustaining transmission and distribution infrastructure.

2020-21 OutlookSaskPower has assessed and continues to monitor the impact of COVID-19 on its operations. The Corporation is anticipating lower than expected revenues in the first quarter. Projections in future months depend largely on the progress made in re-opening the Saskatchewan economy. Despite an expected decrease in revenue, SaskPower is continuing with its capital program, with significant spending planned on sustaining existing infrastructure, developing new generation and connecting customers to the grid.

SaskPower joined other Saskatchewan Crown utilities to provide financial relief to customers by waiving late payment charges and suspending collection activities for six months. As cashflows are expected to be negatively impacted over the duration of this program, debt levels will increase to compensate for the deferred receipt of revenues. Increased finance charges as a result of higher debt levels and an increase in bad debts are the only significant expenses anticipated to be attributed directly to COVID-19.

Key Enterprise Risks, Mitigations and Action PlansSaskPower business operations rely on information and operational technologies which need to be maintained, supported, protected and secured while enabling appropriate access and ensuring reliability, confidentiality, integrity and availability of associated systems and information. Demand for security capabilities will increase as security threats evolve at an exponentially rapid rate. SaskPower has established physical and cyber security controls to defend the servers, networks and data from attack, damage or unauthorized use.

SaskPower operations can inherently impact the safety of employees, contractors, customers, and the general public. There are considerable hazards and risks associated with working on high voltage equipment, on equipment operated at a high temperature or pressure, at heights, with chemicals, and around large machines.

Utilities

In 2019-20, SaskPower became one of only nine Canadian electric utilities to earn the Canadian Electricity Association (CEA) Sustainable Electricity Company™ Designation.

SaskPower becomes a founding sponsor of the Saskatchewan Chamber of Commerce Indigenous Engagement Charter.

SaskPower becomes a founding sponsor of the Saskatchewan Chamber of Commerce Indigenous Engagement Charter.


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SaskPower mitigation strategies include the integration of leadership competencies to foster and reinforce safe work practices. The Standard Protection Code and Standard Operating Procedures have been embedded in SaskPower’s safety culture and operations. Contractors and employees are provided with safety orientations and learning opportunities for compliance with legislation and corporate safety requirements. Safety goals are incorporated into SaskPower’s performance management process. New partnerships have been built to raise awareness of public safety that will reduce farming and construction-related incidents.

SaskPower interacts with a variety of stakeholders within the scope of its operations, including Indigenous communities, customers, business partners, employees, shareholders, governments, regulatory bodies and contractors. Stakeholder expectations are changing, with greater transparency, involvement and stewardship expected. SaskPower mitigation strategies include positive stakeholder engagement through effective communication of SaskPower’s needs and strategic direction. Stakeholder engagement helps SaskPower to achieve its objectives and deal with adversity or significant change when it impacts the organization and its stakeholders. In addition, the First Nations Power Authority has agreed to partner with SaskPower to facilitate Indigenous engagement related to plans for a sustainable power system in Saskatchewan.

As the global spread of COVID-19 evolves, it continues to impact SaskPower’s business functions, financial condition, cash flows and results from operations. SaskPower’s risk management responses to COVID-19 are focused on the health and safety of the workforce and customers, while ensuring business continuity. The controls put in place include, but are not limited to, restricting physical site access, restricting travel, following social distancing guidelines, sustaining adequate cash flows, adjusting demand forecasts and minimizing supply chain interruptions.

Corporate Social ResponsibilityIn 2019-20, SaskPower became one of only nine Canadian electric utilities to earn the Canadian Electricity Association (CEA) Sustainable Electricity Company™ Designation. It demonstrates the scope of the Corporation’s commitment to an environmental, social, and governance focus. The CEA designation is primarily based on the ISO 26000 Guidance on Social Responsibility and recognizes SaskPower’s conformance to the ISO 14001 Environmental Management Standard.

Additionally, SaskPower signed a First Nations Opportunity Agreement to advance a 20-MW solar commitment. It includes the potential for a 10-MW project through the George Gordon and Starblanket First Nations, as well as a 10-MW project led by the Cowessess First Nation. SaskPower also signed a 25-year Power Purchase Agreement with Meadow Lake Tribal Council to develop up to 8-MW of biomass-generated electricity from a facility adjacent to the Norsask Sawmill, located near Meadow Lake.

During the year, SaskPower continued its operation of the Boundary Dam Power Station Unit #3 Carbon Capture and Storage Facility. It reached a milestone of capturing a total of over 3 million tonnes of CO2 since start-up. Meanwhile, SaskPower remains an active partner in Saskatchewan communities. In 2019-20, the Corporation invested almost $1.7 million in educational programming and community initiatives. An additional $3 million was directed to post-secondary education funding that focuses on student development to support the workforce, as well as research and programming that aligns with SaskPower’s priorities and goals.

Key Financial Data Twelve

months 2018-19

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16

Net earnings $ 205.8M $ 197.0M $ 145.5M $ 56.3M $ 25.9M

Operating earnings $ 205.8M $ 197.0M $ 146.5M $ 46.2M $ 123.4M

Dividend declared to CIC $ 20.6M $ 19.7M Nil Nil Nil

Total assets $ 12,203.0M $ 11,811.7M $ 11,456.2M $ 10,908.4M $ 10,433.8M

ROE 7.8% 7.9% 6.2% 2.5% 1.2%

Debt ratio 72.6% 74.1% 74.9% 75.5% 75.2%

Twelvemonths

2019-20

Key Operational Data Twelve

months 2018-19

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16

Total customer accounts 540,727 537,714 532,719 528,059 521,745

Gross electricity supplied (gigawatt hours)

25,033 25,777 25,317 24,374 30,174

Available generating capacity (net megawatts)

4,893 4,531 4,493 4,491 4,437

Annual peak load (net megawatts)

3,722 3,723 3,792 3,747 3,640

Power lines (kilometres) 157,129 156,747 157,562 158,723 156,984

Full-time equivalents 3,602 3,668 3,608 3,643 3,777

Twelvemonths

2019-20

56 CIC Consolidated

2019-20 Financial ResultsEarnings were $119.8 million (2018-19 - $127.4 million), down $7.6 million from 2018-19 primarily due to an impairment loss of $10.7 million related to the impact of COVID-19 on certain legacy revenue resulting in a decline in value of the related assets and goodwill. Revenues remained strong and SaskTel continues to focus on controlled spending.

Total operating revenue increased to $1,283.7 million (2018-19 - $1,277.9 million), up $5.8 million or 0.5 per cent from 2018-19, primarily due to continued wireless adoption and increased revenue from wireline growth services. This growth was partially offset by ongoing declines in legacy wireline services. Growth in wireless revenue reflects a growing subscriber base and increased Average Billing per User (ABPU), and increased revenue in wireline growth services is a result of a higher internet and maxTV revenue per customer, as customers opt for higher internet speeds and more services delivered over SaskTel’s fibre network. The remaining growth in wireline is a result of strong growth in managed and emerging services portfolio.

Total operating expenses were $1,132.1 million (2018-19 - $1,124.7 million), up $7.4 million from 2018-19 primarily due to an impairment loss of $10.7 million related to the impact of COVID-19 on certain legacy revenue resulting in a decline in value of the related assets and goodwill. This is slightly offset by fewer one-time business grade equipment sales, reduced wireless device volumes and decreased salaries and benefits due to workforce efficiencies. The remainder of the decrease is a result of SaskTel’s focus on controlled spending, slightly offset by increased depreciation due to growth in capital assets.

Capital expenditures for the fiscal year were $258.7 million (2018-19 - $262.3 million), down $3.6 million from 2018-19. SaskTel’s capital spending was related to: Fibre to the Premises; capacity improvements to wireline and wireless networks; improvements to rural transport infrastructure to accommodate rural growth of fixed and mobile voice, video and data services; expansion of northern fibre facilities which will bring high speed bandwidth services to northern residents and businesses; access infrastructure expansion for new neighbourhoods and enhancements for existing neighbourhoods; and significant facilities upgrades to ensure continued functionality of core facilities.

Debt increased to $1,298.4 million (2018-19 - $1,196.6 million) to support the capital program described above. The debt ratio of 47.8 per cent (2018-19 - 46.6 per cent) increased as a result of the increase in debt compared to a relatively stable level of equity, year over year.

2020-21 OutlookSaskTel is experiencing changes in customer demands, rapidly evolving technology, increasing competition, and regulatory instability that are contributing to pressures on its revenue, costs, and profit margins. SaskTel plans significant investment in new network technologies and infrastructure, systems, processes, and workforce skills that will ensure it is well positioned for these challenges. SaskTel is focused on delivering an exceptional customer experience and will continue to invest in customer self-serve capabilities.

Throughout 2020-21, SaskTel will continue evolving its product and service offerings in the business and consumer markets in order to meet customer needs and grow revenue. Broadband access is SaskTel’s core service and primary focus area. Fixed and wireless broadband network investments will facilitate providing customers with expanded and enhanced services. Revenue from growth initiatives including internet, cellular, and maxTV services are projected to increase, while revenue from local and long-distance services are projected to decline.

SaskTel will continue to maintain a focus on operational efficiencies and controlled spending, while ensuring the provision of essential services.

Utilities

SaskTel provided support to nearly 1,000 non-profit and charitable organizations, community associations, venues, events and partnerships in more than 233 communities.


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Key Enterprise Risks, Mitigations and Action PlansSaskTel’s networks and systems are core to delivering services and if they became unavailable for an extended period, it could cause significant customer impacts. To help mitigate this risk, networks and systems are designed and built to be highly available, are regularly maintained and updated, key components are alarmed, legacy technology is replaced, and change control processes are established. Should an outage occur, business continuity and disaster recovery plans are in place to minimize impacts.

The telecom industry is experiencing major disruption, making it challenging to increase revenue and profit margins. Several factors contribute to this including commoditization of legacy products, intense competition in the wireless market, entry of non-traditional competitors, and emerging advanced technologies. SaskTel manages this risk by expanding its Broadband network, offering competitive services, placing a strong focus on customer experience, and simplifying and automating the operating environment.

SaskTel, like any company, is subject to cyber attacks or data breaches which could impact its reputation and net earnings. This threat will only increase with the movement toward digitalization, automation, and the increased number of connected devices. SaskTel has extensive controls in place to protect customer, employee and corporate information and mitigate against service disruption. Incident management processes and response plans are prepared should an event occur.

Full impacts of the COVID-19 pandemic are still unknown, but there is a risk that SaskTel will experience significant revenue loss due to reduced customer spending and its ability to deliver services. SaskTel is working to stay connected to customers through advertising campaigns, promotions and finding solutions to support their needs.

Corporate Social ResponsibilityThroughout 2019-20, SaskTel continued its tradition of giving back. SaskTel provided support to nearly 1,000 non-profit and charitable organizations, community associations, venues, events and partnerships in more than 233 communities. With 3,942 members across the province, the SaskTel Pioneers contribute financial donations and completed more than 42,000 hours of volunteer time to support worthwhile community initiatives in 2019-20. SaskTel employees in nine districts raised funds through SaskTel TelCare in 2019-20. Along with SaskTel’s commitment to match 50 per cent of each donation, the funds are allocated to 70 charitable and non-profit organizations operating across Saskatchewan.

As one of Canada’s Top Diversity Companies, SaskTel participates in the ‘4to40’ program, an initiative that aims to connect people experiencing disability with forward-thinking employers who embrace a flexible 4 to 40-hour work week.

Due to SaskTel’s longstanding environmental conservation efforts, it was named one of Canada’s Greenest Employers for the eleventh consecutive year by Mediacorp Canada.

Twelvemonths

2019-20


months 2018-19

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16


Operating revenue $ 1,283.7M $ 1,279.6M $ 1,253.2M $ 1,282.8M $ 1,569.6M

Dividend declared to CIC $ 107.8M $ 114.7M $ 108.9M $ 30.0M $ 37.5M


ROE 10.2% 11.0% 11.9% 15.4% 16.8%

Debt ratio 47.8% 46.6% 46.2% 47.9% 51.9%


months 2018-19

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16

Wireless accesses 618,188 609,951 607,448 615,882 614,221

Wireline accesses 314,739 338,779 361,351 388,519 413,052

Internet (includes maxTV) 276,460 282,710 278,977 275,356 264,196

maxTV subscribers 111,382 112,583 110,881 110,591 107,321

Security monitoring subscribers 85,948 76,692 72,467 73,722 67,173


Twelvemonths

2019-20

58 CIC Consolidated

2019-20 Financial ResultsIn 2019-20 operating earnings before market value adjustments were $66.1 million (2018-19 - $133.3 million). The unfavourable result was primarily due to lower commodity margins, lower delivery revenues due to warmer weather, and losses recorded in 2019-20 compared to gains in 2018-19, as SaskEnergy wrote off storage cavern exploration costs and natural gas inventory at one of its storage facilities. This compares to the realized gains in the prior fiscal year on the sale of natural gas liquid extraction plant assets. These unfavourable results were partially offset by increased transportation revenues compared to prior year. Transmission load growth resulting from continued economic growth in the province contributed to SaskEnergy’s highest level of transportation and storage revenue in its history.

On April 1, 2019, in its continual efforts to support its customers, SaskEnergy decreased its commodity rate to $2.57 per Gigajoule (GJ) as the low natural gas price environment continued. The low natural gas price environment also decreased the commodity cost of gas sold and allowed SaskEnergy to realize favourable natural gas contract settlements, both of which helped to offset the decreasing commodity margin.

At March 31, 2020, the market value adjustments on natural gas contracts resulted in decreases to net earnings. The market price of natural gas was $0.20 per GJ lower than the natural gas price on purchase contracts outstanding at March 31, 2020. This was partially offset by positive market value adjustments on natural gas in storage at March 31, 2020. Through much of 2019-20, SaskEnergy was able to purchase lower priced natural gas and place it into storage, which reduced the average cost of natural gas in storage under the market rate.

Capital investments totaled $328.1 million (2018-19 - $299.7 million). Increases in customer growth and increased spending on system expansion projects have increased the level of capital expenditures. The multi-year initiative to address growth in and around the city of Saskatoon was completed in 2019-20. Expenditures on system integrity and reliability have slightly increased compared to the prior year. These increases were counteracted by a year over year decrease in capital due to the prior year purchase of a new service centre building near White City. SaskEnergy required an additional $212.0 million in long-term debt in 2019-20 to fund a portion of its capital expenditures, resulting in a debt ratio of 57.7 per cent (2018-19 - 54.9 per cent).

2020-21 OutlookIn the final quarter of the 2019-20 fiscal year two extremely impactful situations unfolded. The emergence of COVID-19 and its declaration as a global pandemic occurred in parallel with a collapse of global oil prices. These two factors have caused uncertainty for producers and consumers of natural gas. Almost 60 per cent of the production of natural gas is associated with oil production; hence, as oil producers are forced to shut-in wells due to record low oil prices, associated natural gas production is inadvertently also shut-in. The reduction in Saskatchewan gas supply will require more natural gas to be imported from Alberta. Restrictions imposed to contain the pandemic and market uncertainty have resulted in an economic slowdown with the potential for reduced industrial and commercial gas demand.

Utilities

Twelve months

2018-19 (Restated)

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16


Operating earnings $ 66.1M $ 133.3M $ 110.9M $ 69.9M $ 134.7M



Operating ROE 6.1% 12.9% 12.2% 8.8% 18.8%

Debt ratio 57.7% 54.9% 56.1% 58.6% 61.0%


months2019-20

SaskEnergy’s commitment to environmental stewardship incorporates its Environment & Sustainability department using satellite imagery, wildlife and wildlife habitat, heritage and archaeological site reviews to conduct environmental screenings for distribution projects. This helps protect customer property from unnecessary damage or the introduction of invasive species.


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Residential heating load is unlikely to change significantly. Local and global business closures, global supply chain disruptions, and social-distancing requirements will cause challenges and delays to system improvements, but are unlikely to impact SaskEnergy’s ability to transport or market natural gas. SaskEnergy will continue to monitor and manage the impact of both COVID-19 and the collapse in oil prices on its business strategies as the situation evolves.

Key Enterprise Risks, Mitigations and Action PlansNew regulations can create greater transparency requirements, enhanced protection for stakeholders and the environment, and additional oversight for the industry. SaskEnergy is confident in its adaptability to the evolving regulatory environment, with continuing efforts toward improving efficiency and enhancing service.

Natural gas line, facility or operational failure could disrupt the effective operation of SaskEnergy’s infrastructure, negatively impacting public safety, the environment and customers. Some of the primary processes used to mitigate this risk include system integrity programs, public awareness and safety programs, employee and operator training, and environmental policies and procedures. The financial impacts of these risks are also mitigated, where possible and appropriate, through insurance.

Cyber security comprises technologies, processes and controls that are designed to protect systems, networks and data from cyber-attacks. Effective cyber security reduces the risk of cyber-attacks and protects organizations and individuals from the unauthorized exploitation of systems, networks and technologies.

As a provincial operator of critical energy infrastructure, SaskEnergy operates a number of both manned and unmanned locations. Physical security measures are designed to deny unauthorized access to facilities, equipment and resources and to protect personnel and property from damage or harm. This includes protection from fire, flood, natural disasters, burglary, theft, vandalism and terrorism.

Strategic initiatives undertaken to mitigate cyber, physical and operational risks include business continuity and disaster recovery plans, information technology security processes and a security threat response plan.

COVID-19 and the collapse of global oil prices have also increased previously lower risk concerns including employee health and safety, credit risk, and customer demand. There is no recent precedence to rely on to provide an accurate forecast for the impact of the current situation. However, as it evolves, the organization is continuing to react and address the risks as they arise.

Corporate Social ResponsibilitySaskEnergy is positioning itself for the future by making investments in its infrastructure, processes and people. One of these investments was the Customer Connect Constellation Initiative, which improved SaskEnergy’s ability to fulfill customer requests for natural gas service, from the initial project quote to the date the service is activated. As part of this initiative, SaskEnergy also introduced an online tool for rural residential customers to apply and receive an estimate to install a new natural gas line on their property.

SaskEnergy’s commitment to environmental stewardship is integral in its operations, including when new customers are connected to the system. In 2019-20, a number of process improvements were implemented that resulted in a significant increase in secondary environmental and heritage screenings for distribution projects. When certain environmental or heritage concerns are flagged during initial project screening, the projects are referred to SaskEnergy’s Environment & Sustainability department for secondary screening. A detailed review is then completed to look at satellite imagery, wildlife and wildlife habitat, heritage and archaeological sites, project impacts to water resources, as well as any potential for high risk invasive species. Environmental screenings help protect customer property from unnecessary damage or the introduction of invasive species and assist in ensuring customer projects are completed on time and on budget.


months 2018-19

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16

Total distribution customers 399,826 397,367 394,592 390,886 386,886

Residential average usage (m3) 2,631 2,681 2,736 2,543 3,579

Distribution gas lines (km) 70,996 70,703 70,180 69,870 69,547

Transmission gas lines (km) 15,169 15,090 15,127 15,228 15,156

Compressor horsepower (HP) 95,308 88,588 89,141 86,065 82,615

Peak day gas flows (petajoules) 1.55 1.50 1.50 1.36 1.35


Twelvemonths

2019-20

60 CIC Consolidated

Utilities

2019-20 Financial ResultsSaskWater continued to have strong financial results in 2019-20, with revenues increasing over 2018-19 in core lines of business including all water sales and treatment lines and certified operation and maintenance. The increased revenues were a result of the addition of new water service customers and contract negotiations with existing customers to pace with cost increases.

SaskWater generated earnings of $8.4 million in 2019-20 (2018-19 - $7.5 million). Water sales and treatment revenue increased by 5.1 per cent. Total revenues increased 3.8 per cent, which included a decrease in project management services. Project management is an on-demand service line, with significant focus on the potash industry, and there was very little demand for the service this past year. Overall potable water volumes were down due to more moisture in the summer months than in the previous year. This was offset by the addition of a new potable water customer in the last quarter of 2019-20, along with contractual and discretionary rate increases that kept revenues on par with expense increases for bulk water. Non-potable water sales were up 1.6 per cent for the year, primarily from very strong results in the first quarter, while demand slowed for the remainder of the year in line with the potash market conditions.

Operational expenses have increased 3.4 per cent from 2018-19. Salaries and benefits are up 1.3 per cent with the addition of the new potable water customer and the results of the newly negotiated collective bargaining agreement. Bulk water purchases are up 7.8 per cent due to rate increases from suppliers. Partially offsetting these increases is a reduction in operations, maintenance and administration costs mainly resulting from the decreased level of project management work.

Total debt at March 31, 2020, was $87.4 million (March 31, 2019 - $76.4 million), an increase of $11.0 million. The increase in debt is used to fund a portion of SaskWater’s capital spending during project construction. Additional interest costs of $0.1 million were more than offset by realized gains on sinking fund redemptions and increased sinking fund earnings.

Total capital spending was at similar levels to the previous year at $24.0 million (2018-19 - $24.2 million). SaskWater’s investment in capital spending, net of customer contributions, was $20.4 million of which the majority, $15.4 million, was on the acquisition of new customer assets including the substantial completion of the Melville water treatment plant and the purchase of the Meadow Lake water treatment plant assets. System upgrades and infrastructure replacement programs account for the remaining $5.0 million.

SaskWater helps to build healthy, vibrant communities and a thriving Saskatchewan economy by operating on three principles: economic prosperity, social responsibility and environmental stewardship.

Twelve months

2018-19

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16


Total assets $ 372.0M $ 359.7M $ 351.9M $ 388.1M $ 328.9M

ROE 11.3% 10.7% 12.5% 11.0% 13.7%

Debt ratio 50.0% 46.1% 46.6% 44.7% 45.7%


months2019-20

SaskWater employees support community initiatives throughout the year, including Habitat for Humanity and the 2019 Moose Jaw Health Foundation Radiothon.




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2020-21 OutlookFor 2020-21, SaskWater will continue its focus on growing the core lines of business, with the majority of the effort in continuing to pursue regional opportunities to leverage economies of scale and achieve a lower life cycle cost for potential communities. Continued effort in maximizing cost efficiencies and exploring collaboration opportunities will also be a priority.

Additional strategic projects for the coming year will include effort towards the implementation of new Enterprise Resource Planning software, as well as an updated strategic plan, a brand project and executing a capital plan that will help ensure services continue to be provided and address growth opportunities.

While SaskWater is anticipating another productive and successful year operationally, the effects and impacts of the COVID-19 pandemic create some uncertainties for the coming year. SaskWater has assessed and continues to monitor the current impact of COVID-19 on its operations. The magnitude and duration of COVID-19 remains uncertain and, if it causes significant disruption for an extended period of time, the impacts to SaskWater will likely increase. Potential impacts include loss of revenue, potential supply chain disruption, challenges associated with a remote workforce and potential asset impairment.

Key Enterprise Risks, Mitigations and Action PlansSaskWater’s growth strategy is dependent on the acquisition and operation of municipal, regional and industrial water and wastewater systems in Saskatchewan. Increased competition by municipalities may result in the loss of new business opportunities or non-renewal of existing services. Mitigation strategies include a targeted marketing strategy and growth plan, participating in customer engagement activities and working with larger municipalities to collaborate on the development of regional systems.

Brand is essential to organizations, as it defines how they are unique and influences how programs are delivered to customers. SaskWater has been developing its brand strategy and will be implementing it in 2020-21.

SaskWater’s customer base is concentrated primarily in the industrial sector. Changes in market demand can lead to revenue instability resulting in production swings. Mitigation strategies in place include minimum purchase requirements, efficiency programs, and cost of service rates. SaskWater is continuing to pursue growth opportunities to diversify its business.

Corporate Social ResponsibilityAs a corporation, SaskWater contributes to the province’s well-being by helping to build healthy, vibrant communities and a thriving Saskatchewan economy. Its efforts are based on three principles: economic prosperity, social responsibility and environmental stewardship. During the 2019-20 year, SaskWater’s social responsibility and sustainability initiatives include:

• Delivering customer engagement sessions to nine customer groups in 2019-20;• Sponsoring and/or providing promotional items for 98 events in 37 communities;• SaskWater supports employee professional development;• SaskWater was identified as a WorkSafe Saskatchewan Mission Zero Top 100 Company in 2019-20;• Installing solar panels at the Wakaw-Humboldt water treatment plant and the regional water supply system in Melville to

increase use of renewable energy and lower GHG emissions; and• SaskWater takes an active approach to minimizing water loss on its water supply systems. The target is a water loss rate of

3.0 per cent or less.

Twelve months

2018-19

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16

Total customer accounts 415 415 414 414 411

Total sales volumes (cubic metres)

45.6M 48.7M 44.7M 43.9M 57.4M

Kilometres of potable and non-potable pipeline

942 967 964 935 935

Full-time equivalents 129 130 127 124 120


months2019-20

62 CIC Consolidated

2019-20 Financial ResultsSGI CANADA generated $49.9 million in earnings compared to $48.0 million in 2018-19. The solid financial results were due to improvement in underwriting results partially offset by a decline in investment earnings. SGI CANADA operates in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario.

SGI CANADA continues to experience strong growth, the year over year increase of $84.1 million of gross premiums written represents growth of 9.2 per cent over 2018-19. All jurisdictions saw growth, with the strongest growth coming from Ontario as SGI CANADA is a relatively new entrant into the standard auto market in that province. In other provinces, growth was from additional broker partnerships established that increased market share.

Net claims incurred increased by 4.7 per cent in the year, while the consolidated loss ratio decreased by 4.9 percentage points compared to the prior year. The decrease in the loss ratio was a result of fewer catastrophic losses throughout the country. Also, in Alberta and Ontario, approved premium rate increases helped lower the loss ratio.

SGI CANADA’s investment earnings decreased to $22.7 million (2018-19 - $53.4 million), driven by negative equity returns in the last quarter of the year due to market volatility related to COVID-19.

SGI CANADA’s consolidated Minimum Capital Test (MCT) of 242 per cent (2018-19 - 240 per cent) is consistent with the target and long-term goal of 242 per cent. SGI CANADA’s dividend payout is set at an amount in alignment with achieving the company’s MCT target of 242 per cent. As a result of having a higher MCT, SGI CANADA had capacity to pay a larger dividend than in the previous year.

2020-21 OutlookThe Canadian property and casualty (P&C) industry is highly competitive and continues to experience rapid change driven by technology and other innovations. Technology is leading the way for new and innovative production channels, mobile services, and data-driven processes that can better assess and respond to continuously changing customer expectations.

SGI CANADA has a corporate strategy aimed at addressing the most pressing needs of the organization, reducing the technology deficit and corporate transformation. To achieve this, SGI CANADA will focus on four key areas in 2020-21: empower employees; engage customers; optimize operations; and, transform products.

SGI CANADA is working on optimizing business processes and improving responsiveness through automation and digitization. In 2020-21, SGI CANADA will focus on achieving profitable growth, improving long-term efficiency through process redesign and modern technology implementations. SGI CANADA needs to use data, analytics and artificial intelligence to develop innovative products and services that deliver a tangible advantage. In 2020-21, SGI CANADA will focus on product structure redesign, establishing a framework for data governance and developing processes to leverage proof of concepts and corporate innovation.

Twelve months

2018-19

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16




ROE 11.8% 11.8% 15.8% 18.5% 21.0%

Minimum Capital Test1 242% 240% 242% 243% 249%1 The Minimum Capital Test (MCT) is a capital adequacy test widely used in the insurance industry and indicates capital available to pay claims compared to capital required.

Key Financial Data

Insurance

SGI CANADA supports communities, clubs and associations across Saskatchewan including crime prevention initiatives like Crime Stoppers, Citizens on Patrol, special community events, Kidsport programs, and Red Cross emergency preparedness, awareness and recovery efforts.

Twelvemonths

2019-20


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The insurance industry, although deemed essential, is not isolated from the shockwaves affecting the Canadian economic landscape due to COVID-19. With fewer vehicles on the roads, insurance companies are expecting to see fewer auto claims and several have introduced a variety of COVID-19 discounts to reduce the financial burden to customers. SGI CANADA is working with customers to change payment plans, allowing payment deferrals and waiving returned payment fees. Regarding property claims, the impact is uncertain but restrictions on travel and work is resulting in customers being home throughout the day and could have a positive result on the number of large personal property claims (fire and water); however, businesses will be empty, providing more opportunity for theft.

Investment markets are recovering back to pre COVID-19 levels; however, this path will likely be volatile. Insurance companies have large investment portfolios and this volatility will impact the strength of the company’s balance sheet and, in SGI CANADA’s case, net earnings. SGI CANADA has a strong MCT, has temporarily suspended the securities lending program, and has increased the amount of cash on hand to provide flexibility in response to market volatility. Overall, the impact of COVID-19 on the insurance industry and SGI CANADA continues to be a significant unknown; however, SGI CANADA is maintaining focus on the above items and developing an understanding of the range of possible outcomes.

Key Enterprise Risks, Mitigations and Action PlansSGI CANADA’s top risks relate to: corporate transformation, competition, acquisition and development of expertise, employee change agility, system availability and recovery, responsiveness to business needs, distribution channel, system security, and product design and pricing. These risks represent key areas in SGI’s strategic plan, and, as such, SGI CANADA has prioritized resources towards key business processes and corporate projects which will mitigate these risks. Three of the risks are discussed in more detail as follows.

First, a risk is that SGI CANADA fails to change its people, process and technology to become a digital insurer. SGI CANADA intends to use technology to empower its employees and business partners to add value with each customer interaction and has committed significant business and IT resources to imagine future states of its people, processes and technologies using a disciplined framework.

Second, large competitors pursue market share through aggressive pricing or the purchase of independent brokers, leading to a risk of reduced margins and/or loss of market share. The broker distribution channel shrinks as more insurers transition to selling products directly to consumers. SGI CANADA continues to provide superior service and support to brokers to attract new business and retain the existing book of business and has enhanced pricing with more sophisticated use of data. SGI CANADA monitors market developments closely and continues to introduce new products in the personal and commercial markets, and is developing online services to improve the speed, accuracy and ease.

Finally, SGI CANADA’s business strategy involves risk around its significant corporate transformation efforts. Evolving to be a digital, customer centric insurer is required to meet customer demands, maintain strong public support in Saskatchewan and compete with other insurers across the country. SGI CANADA has initiated programs including expanded competency-based recruitment, movement towards modernized recruitment/staffing processes, expanded knowledge management solutions, succession planning, and monitoring engagement and enablement through employee surveys. A corporate learning strategy focused on growing talent and leaders at all levels has been developed and the Corporation continues to devote additional resources to training and development.

Corporate Social ResponsibilitySGI CANADA supports communities, clubs and associations across Saskatchewan, through formal sponsorships totaling $0.4 million in 2019-20. This included support for crime prevention initiatives like the Regina, Prince Albert and Saskatchewan Crime Stoppers programs, and Citizens on Patrol in Crooked Lake, Yorkton, Kindersley, Lakeland, and Meadow Lake. Support was also provided for special events like the Scotties Tournament of Hearts in Moose Jaw, the Fireworks Festival in Saskatoon, Summer Bash community outdoor movies for Families, the Family Zone at the Regina Exhibition, and safety-related activities organized by the Saskatchewan Trucking Association. To help promote and sustain youth sporting programs, SGI CANADA contributed to KidSport through our Christmas campaign, and provided sponsorship for Football Saskatchewan. SGI CANADA also continued its efforts to help the Red Cross improve the lives of vulnerable people, including those who have been affected by natural disasters. To help with ongoing Red Cross emergency preparedness, awareness and recovery efforts, a donation was provided in 2019-20.

Twelve months

2018-19

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16

Net premiums written $ 940.4M $ 860.9M $ 745.2M $ 693.6M $ 730.0M

Number of policies in force 891,973 846,490 696,635 671,119 639,486

Number of claims 109,387 110,891 116,301 108,122 122,028



months2019-20

64 CIC Consolidated

The Saskatchewan Auto Fund is not a subsidiary Crown corporation. Its results are included in this report because of SGI CANADA’s administration of the Saskatchewan Auto Fund. The results of the Saskatchewan Auto Fund are not included in CIC’s or SGI CANADA’s consolidated financial statements.

2019-20 Financial ResultsThe Saskatchewan Auto Fund (the Auto Fund) had a net loss of $46.7 million (2018-19 - net earnings of $77.5 million). Operating results were negatively affected by the recent decline in investment returns related to COVID-19.

Gross premiums written totaled $962.7 million representing an increase of 0.7 per cent over the prior year. The increase is the result of customers moving to vehicles with higher premiums as the exposures decreased overall during the year with the vehicle insured years decreasing slightly. Overall claims expenses decreased $5.6 million from the prior year.

The Auto Fund generated investment earnings of $2.5 million during the year. Increased volatility related to COVID-19 generated significant negative results in the last three months pushing overall results down for the year. Higher investment earnings in recent years have helped the Auto Fund maintain its capital base near target levels. The total portfolio’s market-based return was 0.4 per cent, compared to a 5.6 per cent return in 2018-19.

2020-21 OutlookThe Auto Fund continues to be efficient and well-run, maintaining an administrative expense ratio below other Canadian public insurers and providing among the lowest auto insurance rates in Canada.

The Auto Fund achieved the primary objectives of the 2016 to 2020-21 corporate strategy per cent reduction in injury and fatalities on Saskatchewan roads, a Customer Experience Index that exceeds the property and casualty insurance industry average, and among the lowest personal auto insurance rates in Canada. As a result, the Auto Fund is bringing an end to the five-year plan a year early and introducing a new corporate strategy aimed at addressing the most pressing needs of the organization, reducing the technology deficit and corporate transformation. To achieve this, the Auto Fund will focus on four key areas in 2020-21: empower employees, engage customers, optimize operations, and transform products.

The Auto Fund needs to develop employee and partner relationships by promoting continuous learning and working effectively together to improve the experience of both employees and customers. In 2020-21, the Auto Fund will focus on continuing to develop its leadership culture and maintaining a disciplined approach to change management.

The Auto Fund is focused on providing customers with personalized experiences and delivery options, enabling them to make more informed decisions and positively influencing their behavior. In 2020-2021, the Auto Fund will focus on refreshing the corporate brand strategy, continuing to apply user-centered design principles, developing a claim handling strategy and continuing to improve traffic safety in Saskatchewan. The Auto Fund is working on optimizing business processes and improving responsiveness through automation and digitization.

In 2020-21, the Auto Fund will focus on maintaining low and stable rates, improving long-term efficiency through process redesign and modern technology implementations.

The insurance industry, although deemed essential, is not isolated from the shockwaves affecting the Canadian economic landscape due to COVID-19. With fewer vehicles on the roads, insurance companies are expecting to see fewer auto claims and several have introduced a variety of COVID-19 discounts to reduce the financial burden to customers. For the Auto Fund, favourable claim experience will be reflected in future rate adjustments as the Rate Stabilization Reserve (RSR) is moved to target levels. The Auto Fund is working with customers to change payment plans, allowing customers to change to short-term registrations to defer payments and waiving returned payment fees.

Investment markets are recovering back to pre-COVID-19 levels; however, this path will likely be volatile. Insurance companies have large investment portfolios and this volatility will impact the strength of the company’s balance sheet and, in Auto Fund’s case, the RSR. The Auto Fund has temporarily suspended the securities lending program, and has increased the amount of cash on hand to provide flexibility in response to market volatility. Overall, the impact of COVID-19 on the insurance industry and the Auto Fund continues to be a significant unknown; however, the Auto Fund is maintaining focus on the above items and developing an understanding of the range of possible outcomes.

Key Enterprise Risks, Mitigations and Action PlansThe Auto Fund’s top risks relate to corporate transformation, acquisition and development of expertise, employee change agility, system availability and recovery, responsiveness to business needs, system security, and market value changes. Three of the risks are discussed in more detail as follows.

Insurance


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Twelve months

2018-19

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16

Net (loss) earnings $ (46.7)M $ 77.5M $ 210.1M $ 188.7M $ 159.1M


Minimum Capital Test1 156% 145% 141% 108% 95%

Rate Stabilization Reserve $ 806.7M $ 853.5M $ 776.0M $ 565.9M $ 377.2M1 The Minimum Capital Test (MCT) is a capital adequacy test widely used in the insurance industry and indicates capital available to pay claims compared to capital required. The Auto Fund target MCT is 140 per cent.

Key Financial Data

First, a risk is that the Auto Fund fails to people, process and technology to become a digital insurer. The Auto Fund intends to use technology to empower its employees and business partners to add value with each customer interaction and has committed significant business and IT resources to imagine future states of its people, processes and technologies using a disciplined framework. The Auto Fund has also stopped all non-critical business enhancements to its current systems.

Second, the Auto Fund’s business strategy involves risk around its significant corporate transformation efforts. Evolving to be a digital, customer centric insurer is required to meet customer demands and maintain strong public support in Saskatchewan. The Auto Fund has initiated programs including expanded competency-based recruitment, movement towards modernized recruitment/staffing processes, expanded knowledge management solutions, succession planning, and monitoring engagement and enablement through employee surveys. A corporate learning strategy focused on growing talent and leaders at all levels has been developed and the Auto Fund continues to devote additional resources to training and development.

Finally, a risk exists as a result of a rapidly changing environment causing the Auto Fund to require employees who have the willingness to embrace and adapt. The Auto Fund has a large number of initiatives dedicated to assisting employees in understanding and adapting to change, including significant efforts in Leadership Culture Development, the introduction of standardized education levels within career streams, expectations incorporated into new job descriptions/evaluations and the introduction of a tiered leadership framework that offers structured learning.

Corporate Social ResponsibilitySGI supports youth community involvement, diversity, and works to make our province’s roads safer. It does this through its traffic safety awareness campaigns, partnerships and sponsorships. In 2019-20, SGI’s Be a Good Wingman campaign – a call to action to never let friends or family drive impaired – grew in reach and recognition through partnerships with First Nations, and hockey and curling rinks across the province. SGI also ran ads and distributed point-of-sale materials to cannabis retailers, emphasizing driver impacts and penalties. SGI continued to offer free rides home on New Year’s Eve in major cities, as well as safe ride services from major events across the province. SGI also partnered with Mothers Against Drunk Driving, providing $0.5 million to fund the SmartWheels bus, a mobile classroom educating students across Saskatchewan about the harmful driving risks associated with alcohol and drug use. And a new campaign, Distracted Driving Kills, emphasized the importance of driving distraction-free. SGI also provided more than $0.4 million in sponsorships in 2019-20 which included support for a wide range of initiatives focusing on youth and cultural diversity. In January 2020, SGI signed the Saskatchewan Chamber of Commerce Indigenous Engagement Charter. The charter is a commitment to bring the Truth and Reconciliation Commission’s Calls to Action into business decisions and practices, becoming an employer of choice that supports the community and reflects the people it serves.

Twelvemonths

2019-20


months 2018-19

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16

Net premiums written $ 952.2M $ 941.8M $ 927.6M $ 925.0M $ 1,111.3M

Number of licensed drivers 816,000 815,000 812,000 806,000 799,000

Number of claims 119,677 121,933 126,316 118,060 137,044

Number of injuries2 3,8501 4,244 4,619 5,768 5,574

Number of fatalities2 71 129 100 125 1211 Injury data for 2019 is preliminary and may change as collision data continues to be reported.2 The number of injuries and fatalities are based on a calendar year.

Twelvemonths

2019-20

66 CIC Consolidated

2019-20 Financial ResultsSGC operates in a mature gaming market where there is significant competition from both land-based and online competitors, as well as competition for general entertainment dollars. In 2019-20, SGC focused on initiatives to support long-term sustainability, while improving guest experience. These initiatives included continued implementation of gaming modernization, developing incremental revenue opportunities and investing in facility modernization.

Net earnings were $20.1 million (2018-19 - $22.5 million), which was a decrease of $2.4 million from 2018-19. The decrease in earnings was primarily due to decreased revenues of $4.6 million. COVID-19 was declared a global pandemic and Saskatchewan declared a state of emergency on March 11, 2020. On the advice of the Saskatchewan Health Authority and the Chief Medical Officer, SGC suspended operations at the close of gaming day on March 16, 2020 until further notice. The temporary closure of Casinos Regina and Moose Jaw resulted in decreased revenues compared to the prior year. SGC estimates revenues lost due to the casino closures to be between $5.2 million and $5.8 million for 2019-20, based on actual results throughout the year.

The decrease in revenues was offset by a decrease in total operating expenses of $2.1 million. This decrease was primarily due to decreased payments to the GRF and continued effective cost management. In 2019-20, SGC paid $20.1 million (2018-19 - $22.5 million) to the GRF to meet the provincial government’s obligations under The Saskatchewan Gaming Corporation Act.

In 2019-20, SGC held debt consisting of a finance lease and short-term debt with the GRF. The finance lease was reduced to $5.0 million (2019 - $5.4 million). In 2019-2020, SGC obtained short-term debt from the GRF in the amount of $5.0 million. This resulted in SGC’s debt to equity ratio increasing to 16.7 per cent (2018-19 - 10.2 per cent). Finance charges for 2019-20 were $0.5 million (2018-19 - $0.6 million).

In support of SGC’s strategic initiatives of gaming and facility modernization, capital expenditures were $10.5 million (2018-19 - $8.9 million). The increase of $1.6 million was a result of gaming technology projects, facility refresh and equipment purchases.

Entertainment

Twelve months

2018-19

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16


Dividends declared to CIC $ 13.3M $ 18.0M $ 18.6M $ 29.5M $ 26.1M


Debt to equity ratio 16.7% 10.2% 11.9% 14.0% 15.7%


months2019-20


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2020-21 OutlookAs a result of the COVID-19 pandemic, Casinos Regina and Moose Jaw will remain closed until such time that the Government of Saskatchewan and Chief Medical Health Officer determine it is safe to reopen. The closure resulted in temporary layoffs of 549 SGC employees. Upon reopening, SGC believes that physical distancing will remain in effect, which will result in reduced capacity in facilities, as well as limited availability of gaming equipment and ancillary services. This is expected to impact revenues and operational results until such time that these measures are relaxed.

Key Enterprise Risks, Mitigations and Action PlansSGC operates in a mature gaming market. While SGC has managed to maintain profitability due to expense reductions and new revenue initiatives, the corporation’s long-term profitability relies on the development of new revenue sources. To address this risk, SGC is modernizing its business model and educating stakeholders on the need to take advantage of new opportunities.

Business interruption quickly became a critical risk due to the COVID-19 pandemic. To mitigate this risk, SGC maintains a business continuity plan with business impact assessments, critical suppliers and departmental action plans. Other mitigations include a pandemic management plan, a strike contingency plan and emergency measures procedures. It also has a corporate disaster recovery plan that is reviewed and tested on an annual basis, as well as a surveillance disaster recovery plan.

Providing an entertaining guest experience is at the core of SGC’s business. Failure to consistently meet guest expectations with respect to facilities, safety and customer service could result in a loss of business, declining revenues and loss of market share. To mitigate this risk, SGC has developed a guest experience strategy to ensure it consistently meets its balanced scorecard targets. In 2019-20, this included training for employees in GameOn 2.0 – the corporation’s updated customer service program. SGC also continued to rollout a multi-year plan to modernize products and services and refresh the casino properties to enhance the guest experience.

Corporate Social ResponsibilitySGC continues to offer casino entertainment in a socially responsible manner, while supporting the communities in which it operates. This included a myriad of new and exciting gaming options and an endowment of $387,800 to 71 organizations, community projects and events in 2019-20.

SGC utilizes the internationally renowned GameSense responsible gambling program to promote informed choices and healthy game play among its guests. Thanks to this commitment, Casinos Regina and Moose Jaw earned reaccreditation through the Responsible Gambling Council’s (RGC) RG Check Program. The RGC is an independent, non-profit organization dedicated to gambling prevention. Only casino properties dedicated to the highest level of responsible gambling programming obtain RG Check accreditation.

SGC introduced 24-hour operations on weekends at Casinos Regina and Moose Jaw. For the safety and well-being of its guests, SGC introduced a new fatigue impairment policy as part of its responsible gambling program to assist staff in responding to guests who exhibit signs of impairment due to fatigue – especially over the weekend during 24-hour operations.

SGC also developed a new whistleblower policy that details the reporting of actual or potential business misconduct such as theft, fraud, security concerns, harm to casino property, conflicts of interest or a violation of any other laws. This new policy also provides details on the protection provided to those employees who report such conduct.

SGC supports the communities in which it operates, including providing endowments to 71 organizations, community projects and events.

Twelve months

2018-19

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16

Guest count (thousands) 2,752 3,257 3,513 3,502 4,394



months2019-20

68 CIC Consolidated

2019-20 Financial ResultsSOCO helps grow Saskatchewan’s technology sector. Through the development and operation of the research and technology parks in Saskatchewan, SOCO provides a unique environment that encourages collaboration, innovation and entrepreneurship. This environment is far more than a cluster of buildings and spaces. It is a carefully constructed framework of tenant clusters and technical, social, physical and business components.

During fiscal 2019-20, thirteen new startup technology companies located at Innovation Place, bringing the total to 185 since 1993. Of the 185 businesses which started operations at the parks, 123 (66 per cent) are still active in Saskatchewan, with 61 of these now operating at locations outside of Innovation Place.

Net earnings of $3.0 million for the year ended March 31, 2020 are $0.5 million lower than the prior fiscal year. Overall revenue remained relatively consistent at $40.5 million (2018-19 - $41.1 million). Similar to revenue, expenses remained relatively consistent at $35.8 million (2018-19 - $35.9 million). Vacancy at March 31, 2020 was 11.5 per cent reflecting an increase of 0.6 per cent when compared to the prior year. Although higher than the historical experience of 3.0 per cent to 5.0 per cent, the current vacancy level is consistent with commercial vacancy trends in Regina and Saskatoon.

Investment in capital assets was $4.0 million (2018-19 - $8.4 million), a decrease of $4.4 million from 2018-19. Total debt outstanding at March 31, 2020 was $56.3 million, $1.1 million lower than at March 31, 2019.

2020-21 OutlookSOCO has assessed and continues to monitor the impact of COVID-19. Potential impacts include loss of revenue, supply chain disruption, challenges with a remote or unavailable workforce and potential asset impairment. The uncertainty over the extent and duration of the COVID-19 disruption limits SOCO’s ability to reasonably forecast results for 2020-21.

The projects that SOCO has planned for 2020-21 either address revenue generating opportunities associated with filling vacant space or capital reinvestments required to ensure SOCO’s infrastructure is maintained in a way that supports long-term sustainability.

Investment & Economic Growth

SOCO provides support and in-kind contributions through partnerships, sponsorships, and donations to youth/diversity groups as well as the science education community.


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Key Enterprise Risks, Mitigations and Action PlansThe primary risk for SOCO is being unable, with a finite amount of space, to support the growth of existing tenants and the establishment of new tenants. SOCO has addressed this risk by reviewing all tenants from the perspective of their strategic relevance to the core technology clusters in order to determine whether any space can be made available through the relocation of non-core tenants to other space within the cities. SOCO and the Management Advisory Committees also evaluate potential new tenants according to their strategic fit in core technology clusters.

Closely associated with the primary risk is the risk of losing a significant tenant or several tenants in one industry, which will negatively impact financial results, an industry cluster, and/or the value for remaining tenants. As the likelihood and impact of this risk increases, it directly affects SOCO’s ability to fulfill its mission and potentially decreases the value of the research parks by eroding existing clusters. SOCO continues to make special efforts to retain key strategic tenants.

The above two risks have a direct correlation on the risk of financial sustainability. As vacancy levels increase, as well as the expectation that start-up companies lacking the capacity to pay full lease rates will locate in the parks, profitability will decrease. SOCO prudently manages expenditures and have implemented several efficiency initiatives which have served to reduce expenditures in order to maintain financial sustainability.

Corporate Social ResponsibilitySOCO uses its resources, through transparent and ethical behavior, to maximize the positive impact SOCO makes while achieving strategic objectives. Business practices and activities include the allocation of dollars and in-kind contributions to partnerships, sponsorships, and donations to youth/diversity groups and to the science and education community.

SOCO recognizes that the corporation and its employees are an integral part of the communities in which it operates. SOCO supports its community through contributions to employee selected causes, such as the United Way, as well as participating in food and toy drives.

A significant part of SOCO’s efforts to assist with the development of its tenants is the extensive amount of programming delivered. The programming largely focuses on enhancing the business, technical and innovation skills of its tenants. Programming also plays a significant role in providing the social environment required to promote the interaction of tenants. In 2019-20, SOCO completed 177 programs, attended by 11,750 people, despite minimal programming taking place in March 2020 due to COVID-19.

Twelve months

2018-19

Twelve months

2017-18

Twelve months

2016-17

Fifteen months

2015-16


Dividends declared to CIC $ 2.7M $ 3.1M $ 3.1M Nil $ 1.5M


Capital spending $ 4.0M $ 8.4M $ 18.8M $ 12.0M $ 5.1M

Debt ratio 22.7% 25.2% 23.3% 18.7% 14.0%


months2019-20

Twelve months

2018-19

Twelve months

2017-18

Twelve months

2016-17


Vacancy rates 11.5% 10.9% 9.7% 7.6% 10.0%

Number of new startup technology companies locating at Innovation Place

13 11 10 10 10



months2019-20

70 CIC Consolidated

RReessppoonnssiibbiilliittyy ffoorr FFiinnaanncciiaall SSttaatteemmeennttss

The accompanying consolidated financial statements have been prepared by management of Crown Investments Corporation of Sask atchewan. They have been prepared in accordance with International Financial Reporting Standards, consistently applied, using management’s best estimates and judgements where appropriate. Management is responsible for the reliability and integr ity of the consolidated financial statements and other information contained in this annual report. CIC’s Board of Directors is responsible for overseeing the business affairs of the corporation and also has the responsibility for approving the financial statements. The Board of Directors is responsible for reviewing the annual f inancial statements and meeting with management, the corporation’s external auditors K PMG LLP, and the Provincial Auditor of Sask atchewan on matters relating to the financial process. Management maintains a system of internal controls to ensure the integr ity of information that forms the basis of the financial statements. Management’s attestation on the adequacy of f inancial controls appears on the opposite page. The Provincial Auditor of Sask atchewan has reported to the legislative assembly that f inancial controls are adequately functioning. K PMG LLP has audited the consolidated financial statements. Their report to the members of the legislative assembly, stating the scope of their examination and opinion on the consolidated financial statements, appears on the following page. B lair Swystun, CFA Cindy Ogilvie, CPA, CA President & CEO V ice President & CFO

June 24, 2020


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AAnnnnuuaall SSttaatteemmeenntt ooff MMaannaaggeemmeenntt RReessppoonnssiibbiilliittyy

I , B lair Swystun, President and Chief Executive Officer of Crown Investments Corporation of Sask atchewan, and I , Cindy Ogilvie, V ice President and Chief Financial Officer of Crown Investments Corporation of Sask atchewan, certify the following:

That we have reviewed the consolidated financial statements included in the Annual Report of Crown Investments Corporation of Sask atchewan. Based on our k nowledge, having exercised reasonable diligence, the consolidated financial statements included in the annual report, fair ly present, in all mater ial respects the financial condition, results of operations, and cash flows, as of March 31, 2020.

That based on our k nowledge, having exercised reasonable diligence, the consolidated financial statements included in the Annual Report of Crown Investments Corporation of Sask atchewan do not contain any untrue statements of mater ial fact, or omit to state a mater ial fact that is either required to be stated or that is necessary to mak e a statement not misleading in light of the circumstances in which it was made.

That Crown Investments Corporation of Sask atchewan is responsible for establishing and maintaining effective internal control over f inancial reporting, which includes safeguarding of assets and compliance with applicable legislative authorities; and Crown Investments Corporation of Sask atchewan has designed internal controls over financial reporting that are appropriate to the circumstances of Crown Investments Corporation of Sask atchewan.

That Crown Investments Corporation of Sask atchewan conducted its assessment of the effectiveness of the Corporation’s internal controls over financial reporting and, based on the results of this assessment, Crown Investments Corporation of Sask atchewan can provide reasonable assurance that internal controls over financial report ing as of March 31, 2020 were operating effectively and no material weak nesses were found in the design or operation of the internal controls over financial reporting.

On behalf of management:

B lair Swystun, CFA Cindy Ogilvie, CPA, CA President & CEO V ice President & CFO

June 24, 2020

72 CIC Consolidated

Independent Auditors' Report To the Members of the Legislative Assembly of Sask atchewan

Opinion

We have audited the consolidated financial statements of Crown Investments Corporation of Sask atchewan (“ the Entity” ) which comprise:

• the consolidated statement of f inancial position as at March 31, 2020 • the consolidated statement of comprehensive income for the year then ended • the consolidated statement of changes in equity for the year then ended • the consolidated statement of cash flows for the year then ended • and notes to the consolidated financial statements, including a summary of significant accounting policies

(hereinafter referred to as the “ f inancial statements” ).

In our opinion, the accompanying financial statements present fair ly , in all mater ial respects, the consolidated financial position of the Entity as at March 31, 2020, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards. Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further descr ibed in the “ Auditors’ Responsibilities for the Audit of the Financial Statements” section of our auditors’ report.

We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulf illed our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Information

Management is responsible for the other information. Other information comprises:

• the information, other than the financial statements and the auditors’ report thereon, included in annual report.

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identif ied above and, in doing so, consider whether the other information is mater ially inconsistent with the financial statements or our k nowledge obtained in the audit and remain alert for indications that the other information appears to be mater ially misstated.

We obtained the information, other than the financial statements and the auditors’ report thereon, included in the annual report as at the date of this auditors’ report.

I f , based on the work we have performed on this other information, we conclude that there is a mater ial misstatement of this other information, we are required to report that fact in the auditors’ report.

We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of f inancial statements that are free from mater ial misstatement, whether due to fraud or error .


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In prepar ing the financial statements, management is responsible for assessing the Entity’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity’s f inancial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from mater ial misstatement, whether due to fraud or error , and to issue an auditors’ report that includes our opinion.

Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a mater ial misstatement when it exists.

Misstatements can ar ise from fraud or error and are considered mater ial if , individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users tak en on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional sk epticism throughout the audit.

We also:

• Identify and assess the r isk s of mater ial misstatement of the financial statements, whether due to fraud or error ,design and perform audit procedures responsive to those r isk s, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion.The r isk of not detecting a mater ial misstatement resulting from fraud is higher than for one resulting from error ,as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overr ide of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theEntity's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based onthe audit evidence obtained, whether a mater ial uncertainty exists related to events or conditions that may castsignificant doubt on the Entity’s ability to continue as a going concern. I f we conclude that a mater ial uncertaintyexists, we are required to draw attention in our auditors’ report to the related disclosures in the financialstatements or , if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditors’ report. However , future events or conditions may cause theEntity to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,and whether the financial statements represent the underlying transactions and events in a manner that achievesfair presentation.

• Communicate with those charged with governance regarding, among other matters, the planned scope andtiming of the audit and significant audit f indings, including any significant deficiencies in internal control that weidentify dur ing our audit.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group Entity to express an opinion on the financial statements. We are responsible for thedirection, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

Chartered Professional Accountants June 24, 2020 Regina, Canada

74 CIC Consolidated

CCrroowwnn IInnvveessttmmeennttss CCoorrppoorraattiioonn ooff SSaasskkaattcchheewwaann CCoonnssoolliiddaatteedd SSttaatteemmeenntt ooff FFiinnaanncciiaall PPoossiittiioonn AAss aatt MMaarrcchh 3311 ((tthhoouussaannddss ooff ddoollllaarrss))

39

Note 2020 2019(Restated – Note 36)

ASSETS Current

Cash and cash equivalents 6 $ 399,308 $ 199,596 Short-term investments 7 311,405 145,912 Short-term investments under securities lending program 7 - 31,811 Accounts receivable 8(d) 1,033,040 1,092,955 Derivative f inancial assets 8 22,102 45,446 Restricted cash and cash equivalents 10 5 Inventories 9 255,854 276,995 Prepaid expenses 241,664 224,412 Assets held-for-sale 10 - 2,090 Contract assets 11 61,548 57,289 Contract costs 11 16,735 15,019

2,341,666 2,091,530

Restricted cash and cash equivalents 4,557 4,587 Investments 7 2,032,800 1,795,356 Investments under securities lending program 7 - 204,353 Contract assets 11 22,341 20,878 Contract costs 11 58,349 44,598 Investments in equity accounted investees 12 73,412 123,634 Property, plant and equipment 13 14,785,672 14,909,377 Right-of-use assets 14 695,150 - Investment property 15 169,240 174,023 Intangible assets 16 415,273 408,198 Other assets 27,050 17,021

$ 20,625,510 $ 19,793,555

LIABILITIES AND PROVINCE’S EQUITY Current

Bank indebtedness $ - $ 6,426 Trade and other payables 892,964 825,639 Derivative financial liabilities 8 105,373 153,498 Notes payable 17 1,449,573 1,470,186 Deferred revenue 18 545,625 509,359 Provisions 19 267,303 263,693 Lease liabilities 20 44,444 27,490 Long-term debt due within one year 21 441,246 69,135 Contract liabilities 22 99,922 104,090

3,846,450 3,429,516

Provisions 19 1,022,755 889,747 Lease liabilities 20 1,043,008 1,092,868 Long-term debt 21 8,451,387 8,255,954 Contract liabilities 22 169,950 173,879 Employee future benefits 23 241,650 249,930 Other liabilities 24 35,798 35,988

14,810,998 14,127,882

Equity advances 25 808,889 908,889 Retained earnings 4,865,026 4,679,664 Accumulated other comprehensive income 26 140,597 77,120

5,814,512 5,665,673

$ 20,625,510 $ 19,793,555

27 Commitments and contingencies

(See accompanying notes)

On behalf of the Board:

Director Director


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CCrroowwnn IInnvveessttmmeennttss CCoorrppoorraattiioonn ooff SSaasskkaattcchheewwaann CCoonnssoolliiddaatteedd SSttaatteemmeenntt ooff CCoommpprreehheennssiivvee IInnccoommee FFoorr tthhee YYeeaarr EEnnddeedd MMaarrcchh 3311 ((tthhoouussaannddss ooff ddoollllaarrss))

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Note 2020 2019

INCOME FROM OPERATIONS 28 Revenue $ 5,924,007 $ 5,877,282 Other income 6,150 5,944 5,930,157 5,883,226 EXPENSES Operating 2,872,875 2,841,781 Salaries, wages and short-term employee benefits 881,562 870,934 Employee future benefits 23 69,925 69,173 Depreciation and amortization 29 927,607 881,206 Loss on disposal of property, plant and equipment 47,146 17,429 Impairment losses 30 22,669 10,237 Provision for decommissioning and environmental remediation liabilities 19 1,919 36,020 Saskatchewan taxes and fees 31 175,354 171,729 4,999,057 4,898,509 RESULTS FROM OPERATING ACTIVITIES 931,100 984,717 Finance income 32 127,302 158,798 Finance expenses 32 (628,292) (611,562) NET FINANCE EXPENSES (500,990) (452,764) Share of net earnings from equity accounted investees 12 5,252 8,660 EARNINGS FROM CONTINUING OPERATIONS 435,362 540,613 Loss from discontinued operations 10 - (38) NET EARNINGS 435,362 540,575 OTHER COMPREHENSIVE INCOME Items that may be reclassified subsequently to net earnings: Unrealized gains on sink ing funds 7(a) 24,304 24,483 Unrealized gains on cash flow hedges 26,167 3,944 Amounts amortized to net earnings and included in f inance income 75 459 Reclassification for realized gains on sale of investments included in operations 384 - Items that will not be reclassif ied to net earnings: Impact of changes in actuar ial assumptions on defined benefit pension plans 23 98,566 (42,002) Impact of changes in actuar ial assumptions on other defined benefit plans 23 619 593 (Loss) return on pension plan assets (excluding interest income) 23 (86,638) 38,087

OTHER COMPREHENSIVE INCOME 63,477 25,564 TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO THE PROVINCE OF SASKATCHEWAN $ 498,839 $ 566,139 (See accompanying notes)

76 CIC Consolidated

CCrroowwnn IInnvveessttmmeennttss CCoorrppoorraattiioonn ooff SSaasskkaattcchheewwaann CCoonnssoolliiddaatteedd SSttaatteemmeenntt ooff CChhaannggeess iinn EEqquuiittyy FFoorr tthhee YYeeaarr EEnnddeedd MMaarrcchh 3311 ((tthhoouussaannddss ooff ddoollllaarrss))

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Attributable to the Province of Saskatchewan

Accumulated Other Comprehensive Equity Contributed Retained Income Total

Advances Surplus Earnings (Note 26) Equity

Balance at April 1, 2018 As previously reported $ 908,889 $ 85 $ 4,414,341 $ 51,556 $ 5,374,871 Restatement (Note 36) - - (19,252) - (19,252) As restated 908,889 85 4,395,089 51,556 5,355,619

Total comprehensive (loss) income - (85) 540,575 25,564 566,054 Dividends to the General Revenue Fund (GRF) - - (256,000) - (256,000) Balance at March 31, 2019 908,889 - 4,679,664 77,120 5,665,673

Balance at April 1, 2019 908,889 - 4,679,664 77,120 5,665,673

Total comprehensive income - - 435,362 63,477 498,839 Equity advances repaid to the GRF (100,000) - - - (100,000) Dividends to the GRF - - (250,000) - (250,000) Balance at March 31, 2020 $ 808,889 $ - $ 4,865,026 $ 140,597 $ 5,814,512

(See accompanying notes)


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CCrroowwnn IInnvveessttmmeennttss CCoorrppoorraattiioonn ooff SSaasskkaattcchheewwaann CCoonnssoolliiddaatteedd SSttaatteemmeenntt ooff CCaasshh FFlloowwss FFoorr tthhee YYeeaarr EEnnddeedd MMaarrcchh 3311 ((tthhoouussaannddss ooff ddoollllaarrss))

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Note 2020 2019 OPERATING ACTIVITIES Net earnings $ 435,362 $ 540,575 Adjustments to reconcile net earnings to cash from operating activities 33(a) 1,517,474 1,319,044 1,952,836 1,859,619 Net change in non-cash work ing capital balances related to operations 161,561 49,532 Income taxes (paid) received (460) 5,362 Interest paid (569,561) (560,330) Net cash from operating activities 1,544,376 1,354,183 INVESTING ACTIVITIES Interest received 31,599 34,801 Dividends received 4,473 4,570 Purchase of investments (1,190,804) (1,020,069) Proceeds from sale and collection of investments 1,178,203 1,027,175 Purchase of property, plant and equipment (1,237,702) (1,366,450) (Costs) proceeds from sale of property, plant and equipment (16,783) 23,501 Purchase of intangible assets (83,846) (61,113) Purchase of investment property (3,856) (8,318) Decrease in restricted cash and cash equivalents 25 30,286 Decrease (increase) in other assets 2,494 (323) Net cash used in investing activities (1,316,197) (1,335,940) FINANCING ACTIVITIES 33(b) Decrease in notes payable (20,613) (93,309) Decrease in other liabilities (98,484) (49) Debt proceeds from the GRF 671,340 597,090 Debt repayments to the GRF (42,593) (50,000) Debt proceeds from other lenders 42,209 - Debt repayments to other lenders (110,053) (97,702) Principal repayment of lease liabilities (37,926) - Sink ing fund installments (86,133) (80,501) Sink ing fund redemptions 10,212 - Equity advances repaid (100,000) - Dividends paid to the GRF (250,000) (256,000) Net cash (used in) from financing activities (22,041) 19,529 NET CHANGE IN CASH AND CASH EQUIVALENTS DURING YEAR 206,138 37,772 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 193,170 155,398 CASH AND CASH EQUIVALENTS, END OF YEAR $ 399,308 $ 193,170 Cash and cash equivalents consists of: Cash and cash equivalents 6 $ 399,308 $ 199,596 Bank indebtedness - (6,426) $ 399,308 $ 193,170 (See accompanying notes)

78 CIC Consolidated

CCrroowwnn IInnvveessttmmeennttss CCoorrppoorraattiioonn ooff SSaasskkaattcchheewwaann NNootteess ttoo CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss MMaarrcchh 3311,, 22002200


11.. GGeenneerraall iinnffoorrmmaattiioonn Crown Investments Corporation of Sask atchewan (CIC) is a corporation domiciled and incorporated in Canada. The address of CIC’ s registered office and pr incipal place of business is 400 - 2400 College Avenue, Regina, SK , S4P 1C8. The consolidated financial statements of CIC comprise CIC and its subsidiar ies (collectively referred to as “ CIC” or “ the Corporation” ) and the Corporation’s interest in associates, joint ventures and joint operations with pr incipal activities as descr ibed in Note 4(a).

22.. BBaassiiss ooff pprreeppaarraattiioonn aa)) SSttaatteemmeenntt ooff ccoommpplliiaannccee

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The consolidated financial statements were authorized for issue by the Board of Directors on June 24, 2020.

bb)) BBaassiiss ooff mmeeaassuurreemmeenntt

The consolidated financial statements have been prepared on the histor ical cost basis except for the following: • Inventory at lower of cost and net realizable value (Note 4(c)). • Financial instruments that are accounted for according to the categories defined in Note 4(i). • Certain prepaid expenses for property and casualty insurance are discounted at expected

future cash flows (Note 4(l)). • Provisions discounted at expected future cash flows (Note 19). • Employee future benefits are recognized at the fair value of plan assets less the present value of the

accrued benefit obligation (Note 23).

cc)) FFuunnccttiioonnaall aanndd pprreesseennttaattiioonn ccuurrrreennccyy The consolidated financial statements are presented in Canadian dollars, which is the Corporation’s functional currency.

dd)) UUssee ooff eessttiimmaatteess The preparation of f inancial statements in conformity with IFRS requires management to mak e estimates and assumptions that af fect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognized in the per iod in which the estimates are revised and in any future per iods affected.

Significant items subject to estimates and assumptions include the carrying amounts of property, plant and equipment (Note 13, 29, and 30), r ight-of-use assets (Note 14), lease liabilities (Note 20), intangible assets (Note 16, 29 and 30), investment property (Note 15 and 29), provisions (Note 19), accounts receivable (Note 8(d)), inventor ies (Note 9), investments (Note 7 and 30), contract assets and costs (Note 11), contract liabilities (Note 22) and investments in equity accounted investees (Note 12), the underlying estimations of useful lives of depreciable assets (Note 29), the fair value of f inancial instruments (Note 8), the carrying amounts of employee future benefits including underlying actuar ial assumptions (Note 23), and the measurement of commitments and contingencies (Note 27).


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22.. BBaassiiss ooff pprreeppaarraattiioonn (continued)

ee)) UUssee ooff jjuuddggeemmeennttss The preparation of f inancial statements in conformity with IFRS requires management to mak e

judgements that affect the application of accounting policies. Significant items subject to judgement are included in the accounting policies listed in Note 4.

ff)) CCOOVVIIDD--1199 iimmppaacctt aasssseessssmmeenntt The COV ID-19 pandemic has caused mater ial disruption to businesses and has resulted in an economic

slowdown. The Corporation has assessed and continues to monitor the impact of COV ID-19 on its operations. The magnitude and duration of COV ID-19 is uncertain and, if it causes significant disruption for an extended per iod of time, the impacts to the Corporation will increase. Potential impacts include loss of revenue, disruption of supply chain, impairments of assets and challenges associated with a remote or unavailable work force.

33.. AApppplliiccaattiioonn ooff nneeww aaccccoouunnttiinngg ssttaannddaarrddss

The following amendments to standards, effective for annual per iods beginning on or after January 1, 2019, have been applied in prepar ing these consolidated financial statements:

IIFFRRSS 1166,, LLeeaasseess

Effective April 1, 2019, the Corporation adopted IFRS 16, Leases which provides pr inciples for the recognition, measurement, presentation and disclosure of leases. The standard removed the distinction between operating and finance leases and introduced a single, on-balance sheet accounting model requir ing lessees to recognize r ight-of-use assets and lease liabilities. Previously, at contract inception, the Corporation determined whether an arrangement was or contained a lease under IAS 17, Leases or IFRIC 4, Determining whether an arrangement contains a lease. The Corporation elected to adopt IFRS 16 using the modified retrospective approach on transition. Comparative information has not been restated and continues to be reported under IAS 17. There was no impact to opening retained earnings upon adoption. Refer to the Corporation’s most recent annual report for information on its pr ior accounting policies for leases. In adopting IFRS 16, the Corporation elected to apply the following practical expedients permitted by the standard:

i . Electing to grandfather the assessment of which transactions are leases by applying the standard to contracts previously identif ied as leases and not reassessing contracts not previously identif ied as containing a lease under IAS 17 and IFRIC 4;

i i . Exemption to not recognize r ight-of-use assets and lease liabilities for short-term leases that have a remaining lease term of less than 12 months as at Apr il 1, 2019, and for low value leases;

i i i . Measur ing the r ight-of-use asset at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the statement of f inancial position immediately before the date of initial application;

iv . Applying a single discount rate to a portfolio of leases with reasonably similar character istics (such as leases with a similar remaining lease term for a similar class of underlying asset in a similar economic environment);

v . Using hindsight to determine the lease term where the contract contains options to extend or terminate the lease; and

vi. Excluding initial direct costs for the measurement of the r ight-of-use asset at the date of initial application.

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33.. AApppplliiccaattiioonn ooff nneeww aaccccoouunnttiinngg ssttaannddaarrddss (continued) Adoption of IFRS 16 did not result in any mater ial impact to net earnings for the year ended March 31, 2020. Upon adoption of IFRS 16, the Corporation changed its accounting policy for leases, which is outlined in the following pages.

Impact of the new definition of a lease The Corporation now assesses whether a contract is or contains a lease based on the new definition of a lease. The change in the definition mainly relates to the concept of control. Under IFRS 16, a contract is or contains a lease if the contract conveys a r ight to control the use of an identif ied asset for a per iod of time in exchange for consideration. The Corporation applied the definition of a lease and related guidance under IFRS 16 to all existing lease contracts as at Apr il 1, 2019. Impact on lessor accounting The accounting policies applicable to the Corporation as a lessor under IFRS 16 remain largely unchanged from those under IAS 17. Impact on lessee accounting IFRS 16 changes how the Corporation accounts for leases previously classif ied as operating leases under IAS 17 and IFRIC 4. For contracts meeting the definition of a lease under IFRS 16, but not meeting the exemption for short-term or low value leases, the Corporation:

i . Recognizes r ight-of-use assets and lease liabilities in the statement of f inancial position, initially measured at the present value of the remaining lease payments discounted at the Corporation’s incremental borrowing rate or the rate implicit in the lease;

i i . Recognizes depreciation on the r ight-of-use assets and interest expense on the lease liabilities in the statement of comprehensive income; and

iii . Recognizes pr incipal repayments on lease liabilities as f inancing activities and interest payments on lease liabilities as operating activities in the statement of cash flows.

For short-term and low value leases, the Corporation recognizes the lease payments as an operating expense. V ar iable lease payments that do not depend on an index or a rate are not included in the measurement of the lease liability and the r ight-of-use asset and are recognized as an expense in the per iod in which the event or condition that tr iggers the payment occurs. Short-term, low value and var iable lease payments were determined to be immater ial for the year ended March 31, 2020. For new leases beginning on or after Apr il 1, 2019, a r ight-of-use asset and lease l iability are recognized at the lease commencement date. The r ight-of-use asset is initially measured at an amount equal to the lease liability and is adjusted for any payments made at or before the commencement date, less any lease incentives received. The lease liability is initially measured at the present value of the lease payments that are not paid at commencement and are discounted using the Corporation’s incremental borrowing rate or the rate implicit in the lease. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a change in future lease payments ar ising from a change in an index or rate, or if there is a change in the Corporation’s estimate or assessment of whether it will exercise an extension, termination, or purchase option. A corresponding adjustment is made to the r ight-of-use asset or is recorded in the Consolidated Statement of Comprehensive Income if the carrying amount of the r ight-of-use asset has been reduced to zero.


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33.. AApppplliiccaattiioonn ooff nneeww aaccccoouunnttiinngg ssttaannddaarrddss (continued)

Right-of-use assets are depreciated over the related lease term. The Corporation has applied judgment to determine the lease term for contracts that include renewal options. The assessment of whether the Corporation is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and r ight-of-use assets recognized.

Impact on transition

The Corporation presents r ight-of-use assets and lease liabilities as separate line items on the Consolidated Statement of Financial Position. The impact on initial application of IFRS 16 on April 1, 2019, is shown below: Consolidated Statement of Financial Position Notes March 31, 2019 IFRS 16 Apr il 1, 2019 (thousands of dollars) adjustment

Property, plant and equipment (cost) 13 $ 25,457,180 $ (1,265,775) $ 24,191,405 Property, plant and equipment (accumulated (depreciation) 13 (10,547,803) 526,064 (10,021,739) Right-of-use assets (cost) 14 - 1,351,961 1,351,961 Right-of-use assets (accumulated depreciation) 14 - (526,090) (526,090)

Current portion of lease liabilities 20 (27,490) (14,916) (42,406) Lease liabilities 20 (1,092,868) (71,244) (1,164,112)

Upon adoption of IFRS 16, the Corporation recognized additional r ight-of-use assets and lease liabilities. As at March 31, 2019, the Corporation’s commitment to future lease payments, not including finance lease obligations, was $69.7 million. The Corporation has recognized $86.2 million of lease liabilities on the initial application of IFRS 16 on April 1, 2019 at a weighted average discount rate of 1.9 per cent - 4.0 per cent. The dif ference between operating lease commitments at March 31, 2019 and the lease liabilities at Apr il 1, 2019 is mainly due to an increase of $29.4 million related to renewal options reasonably certain to be exercised and a reduction of $13.3 million related to discounting of future lease payments.

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44.. SSiiggnniiffiiccaanntt aaccccoouunnttiinngg ppoolliicciieess The accounting policies set out below have been applied consistently to all per iods presented in these consolidated financial statements except as descr ibed in Note 3. The accounting policies have been consistently applied by CIC’ s subsidiar ies.

aa)) BBaassiiss ooff ccoonnssoolliiddaattiioonn

SSuubbssiiddiiaarriieess Sask atchewan provincial Crown corporations are either designated as subsidiary Crown corporations of CIC or created as CIC Crown corporations under The Crown Corporations Act, 1993 (the Act). The Act assigns specific f inancial and other responsibilities regarding these corporations to CIC. In addition to the Crown corporations listed below, the Corporation also consolidates the following wholly-owned share capital subsidiar ies: CIC Asset Management Inc. ; First Nations and Métis Fund Inc. ; CIC Economic Holdco Ltd. ; and Sask atchewan Immigrant Investor Fund Inc. (SI IF), all of which are domiciled in Canada. Separate audited financial statements for CIC have been prepared to show the financial position and results of operations of the corporate entity. In addition, audited financial statements for each of the undernoted Crown corporations, which are consolidated in these financial statements, are prepared and released publicly:

Wholly-owned subsidiaries domiciled in Canada Principal Activity Sask Energy Incorporated (Sask Energy) Natural gas storage and delivery Sask atchewan Gaming Corporation (SGC) Entertainment Sask atchewan Government Insurance (SGI CANADA) Property and casualty insurance Sask atchewan Opportunities Corporation (SOCO) Research park s Sask atchewan Power Corporation (Sask Power) Electr icity Sask atchewan Telecommunications Holding Corporation and Sask atchewan Telecommunications (collectively Sask Tel)

Information and communications technology

Sask atchewan Transportation Company (STC) (Note 10) Passenger and freight transportation

Sask atchewan Water Corporation (Sask Water) Water and wastewater management AAssssoocciiaatteess aanndd jjooiinntt vveennttuurreess ((iinnvveessttmmeennttss iinn eeqquuiittyy aaccccoouunntteedd iinnvveesstteeeess)) Associates are those entities in which the Corporation has significant influence, but not control over strategic f inancial and operating decisions. Significant influence is presumed to ex ist when the Corporation holds between 20.0 and 50.0 per cent of the voting power of another entity. Joint ventures are those entities over whose activities the Corporation has joint control, established by contractual agreement and requir ing unanimous consent for strategic f inancial and operating decisions, and provide the Corporation with r ights to the net assets of the arrangement. Associates and joint ventures are accounted for using the equity method and are recognized initially at cost. The Corporation’s investment includes any goodwill identif ied at acquisition, net of accumulated impairment losses.


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44.. SSiiggnniiffiiccaanntt aaccccoouunnttiinngg ppoolliicciieess (continued) The consolidated financial statements include the Corporation’s share of the total comprehensive income and equity movements of equity accounted investees, after adjustments to align the accounting policies with those of the Corporation, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Corporation’s share of losses exceeds its interest in equity accounted investees, the carrying amount of that interest is reduced to Nil and the recognition of further losses is discontinued except to the extent that the Corporation has an obligation or has made payments on behalf of the investee. The Corporation signed an agreement to sell its 30.0 per cent ownership interest in the MRM Cogeneration Station with an effective date of December 31, 2019. As of March 31, 2020, the Corporation no longer holds its investment. JJooiinntt ooppeerraattiioonnss Joint operations are those entities over whose activities the Corporation has joint control, established by contractual agreement and requir ing unanimous consent for strategic f inancial and operating decisions; and provide the Corporation with r ights to the assets, and obligations for the liabilities, related to the arrangement. The consolidated financial statements include the Corporation’s proportionate share of joint operation assets, incurred liabilities, income and expenses. The Corporation has classif ied the following as joint operations:

i) TToottnneess NNaattuurraall GGaass SSttoorraaggee FFaacciilliittyy ((TToottnneess))

The Corporation has a 50.0 per cent interest in Totnes, which operates natural gas storage facilities

in Sask atchewan. ii) CCoorryy CCooggeenneerraattiioonn SSttaattiioonn ((CCoorryy)) The Corporation had a 50.0 per cent interest in an unincorporated joint venture with ATCO Power

Canada Ltd. The joint venture owned and operated a 249 megawatt (MW) natural gas-fired, cogeneration power plant (Cory) in Sask atchewan. The electr icity generated by the facility is sold to the Corporation under the terms of a 25-year power purchase agreement.

Effective July 11, 2019, the Corporation purchased the remaining 50.0 per cent ownership interest in

the Cory Cogeneration Station Joint V enture and the remaining 50.0 per cent ownership interest in Cory Cogeneration Funding Corporation, of which it was already part-owner with ATCO Power Canada Ltd. Upon purchase, the joint venture was dissolved and the power purchase agreement (PPA) between the Corporation and the joint venture was terminated.

iii) IInntteerrnnaattiioonnaall CCCCSS KKnnoowwlleeddggee CCeennttrree

The Corporation has a 50.0 per cent interest in the BHP B illiton Sask Power International Carbon

Capture and Storage (CCS) K nowledge Centre. This not-for-profit corporation was established to advance the understanding and use of CCS as a means of managing greenhouse gas emissions and to further research projects as agreed upon by its members from time to time.

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44.. SSiiggnniiffiiccaanntt aaccccoouunnttiinngg ppoolliicciieess (continued)

TTrraannssaaccttiioonnss eelliimmiinnaatteedd oonn ccoonnssoolliiddaattiioonn Inter-group balances and transactions, and any unrealized income and expenses ar ising from inter-group transactions, are eliminated in prepar ing the consolidated financial statements. Unrealized gains ar ising from transactions with investments in equity accounted investees are eliminated against the investment to the extent of the Corporation’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

bb)) CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss

Cash and cash equivalents include short-term investments that have a matur ity date of ninety days or less. The Corporation classif ies cash and cash equivalents as f inancial instruments at fair value through profit or loss.

cc)) IInnvveennttoorriieess

Inventor ies for resale, including natural gas in storage held-for-resale, are valued at the lower of weighted average cost and net realizable value. Net realizable value represents the estimated selling pr ice for inventor ies less all estimated costs necessary to mak e the sale. Net realizable value for natural gas inventory is determined using natural gas mark et pr ices based on anticipated delivery dates. Natural gas in storage held-for-resale is charged to inventory when purchased and expensed as sold. Other supplies inventor ies are valued at the lower of weighted average cost and net realizable value. Replacement cost is used as management’s best estimate of the net realizable value for other supplies inventory. In establishing the appropriate provision for supplies inventory obsolescence, management estimates the lik elihood that supplies inventory on hand will become obsolete due to changes in technology. Other supplies are charged to inventory when purchased and expensed or capitalized when used.

dd)) CCoonnttrraacctt aasssseettss,, ccoossttss aanndd lliiaabbiilliittiieess A contract asset is recognized when the Corporation’s r ight to consideration from the transfer of products or services to a customer is conditional on the obligation to transfer other products or services. Contract assets are transfer red to accounts receivable when the r ight to consideration becomes conditional only as to the passage of time. A contract liability is recognized when consideration is received in advance of the transfer of products or services to the customer . Contract liabilities are recognized in revenue upon satisfaction of the related performance obligations. Contract assets and liabilities relating to the same contract are presented on a net basis. Amortization is recognized in net earnings on a straight-line basis consistently with the pattern of revenue of the related contract if the cost of obtaining the contract is expected to be recovered, ranging from two to ten years. Incremental costs of obtaining a contract with a customer , pr incipally comprised of sales commissions, and prepaid contract fulf illment costs, are recognized on the Consolidated Statement of Financial Position. Capitalized costs are amortized on a systematic basis that is consistent with the per iod and pattern of transfer to the customer of the related products or services.


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ee)) PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt Property, plant and equipment is measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attr ibutable to the acquisition or construction of the asset. The cost of self-constructed assets includes mater ials, services, direct labour , directly attr ibutable overheads, and other costs directly attr ibutable to prepar ing the asset for its intended use. Interest costs associated with major capital and development projects are capitalized dur ing the construction per iod at the weighted average cost of long-term borrowings. Assets under construction are recorded as in progress until operational and available for use, at which time they are transferred to property, plant and equipment. Costs are recognized as an asset if it is probable that economic benefits associated with the item will f low to the Corporation and the cost can be reliably measured. Significant renewals and enhancements to existing assets are capitalized only if the useful life of the asset is increased, physical output, service capacity or quality is improved above or iginal design standards, or operating costs are reduced by a substantial and quantif iable amount that can be reliably measured. The cost of maintenance, repairs, renewals or replacements which do not provide benefits into the future are charged to operating expense as incurred.

Significant parts of an item of property, plant and equipment that have dif ferent useful lives are accounted for as separate items of property, plant and equipment. When property, plant and equipment is disposed of or retired, the related costs less accumulated depreciation and impairment losses are eliminated from the accounts. Any resulting gains or losses are reflected in net earnings in the per iod of disposal.

ff)) DDeepprreecciiaattiioonn ooff pprrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt

Depreciation is calculated on the depreciable amount, which is the cost of an asset less its residual amount. Depreciation is recorded pr imarily on the straight-line basis over the useful life of each asset as follows:

Machinery and equipment 3 - 110 years Buildings and improvements 3 - 100 years Coal properties and r ights 20 years

The useful life and depreciation method are reviewed per iodically to ensure consistency with the expected pattern of economic benefits from these assets. Right-of-use assets are depreciated over the lease term.

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gg)) IInnttaannggiibbllee aasssseettss GGooooddwwiillll Goodwill that ar ises upon the acquisition of subsidiar ies is included in intangible assets. The Corporation measures goodwill as the fair value of the consideration transferred less the net recognized amount (generally fair value) of the identif iable assets acquired and liabilities assumed, all measured as of the acquisition date. When the excess is negative, a bargain purchase gain is recognized immediately in net earnings. Subsequent to acquisition, goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity accounted investee. On disposal of a subsidiary or a joint operation, the attr ibuted amount of goodwill is included in the determination of the gain or loss on disposal.

FFiinniittee--lliiffee iinnttaannggiibblleess Finite-life intangible assets, acquired individually, with a group of other assets, or through the Corporation’s authorized dealers are measured at cost of acquisition or development less accumulated amortization and accumulated impairment losses and may include direct development costs and overhead costs directly attr ibutable to the development activity. Capitalized software includes externally purchased software pack ages as well as external and internal direct labour costs related to internally developed programs. Software development costs are capitalized if it is probable that the asset developed will generate future economic benefits. Software is amortized on a straight-line basis over an estimated useful life of 1 to 10 years from the date of acquisition. Maintenance of existing software programs is expensed as incurred.

Estimated useful lives of f inite-life intangible assets are reviewed annually with any changes applied prospectively.

IInnddeeffiinniittee--lliiffee iinnttaannggiibblleess

Spectrum licences, for wireless telecommunication services, have been classif ied as indefinite-life intangible assets due to the current licensing terms, the most significant of which are minimal renewal fees and no regulatory precedent of mater ial licence revocation. Should these factors change, the classif ication as indefinite life will be reassessed. The licences are not subject to amortization and are carr ied at cost less accumulated impairment losses.


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44.. SSiiggnniiffiiccaanntt aaccccoouunnttiinngg ppoolliicciieess (continued) hh)) IInnvveessttmmeenntt pprrooppeerrttyy

Properties held for rental purposes are classif ied as investment properties and are measured at cost less accumulated amortization and impairment losses. Amortization is recorded on investment property on the straight-line basis over the estimated life of each asset as follows:

Buildings 20 - 80 years Infrastructure 25 - 60 years Leasehold improvements Lease term

Depreciation commences when the asset is ready for its intended use. The useful life and depreciation method are reviewed per iodically to ensure consistency with the expected pattern of economic benefits from these assets.

ii)) FFiinnaanncciiaall iinnssttrruummeennttss

The Corporation classif ies its f inancial instruments into one of the following categories: fair value through profit or loss; amortized cost; and fair value through other comprehensive income. Financial assets and liabilities are offset and the net amount reported on the Consolidated Statement of Financial Position when there is a legally enforceable r ight to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. CCllaassssiiffiiccaattiioonn aanndd mmeeaassuurreemmeenntt

All f inancial instruments are measured at fair value on initial recognition. Transaction costs are included in the initial carrying amount of f inancial instruments except for f inancial instruments at fair value through profit or loss in which case the transaction costs are expensed as incurred. Measurement in subsequent per iods depends on the classif ication of the financial instrument (Note 8). i) FFiinnaanncciiaall iinnssttrruummeennttss aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss

The Corporation classif ies cash and cash equivalents, der ivative f inancial assets and liabilities that do not qualify as a hedge and are not designated as a hedge, restr icted cash and cash equivalents, certain investments, and bank indebtedness as f inancial instruments at fair value through profit or loss. Financial instruments classif ied as fair value through profit or loss are subsequently measured at fair value with changes in fair value recognized in net earnings.

ii) FFiinnaanncciiaall iinnssttrruummeennttss aatt aammoorrttiizzeedd ccoosstt

The Corporation classif ies accounts receivable, certain investments, trade and other payables, notes payable and long-term debt as amortized cost. Amortized cost f inancial instruments are subsequently measured at amortized cost using the effective interest method, less any provision for impairment losses on financial assets.

88 CIC Consolidated


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iii) FFiinnaanncciiaall iinnssttrruummeennttss aatt ffaaiirr vvaalluuee tthhrroouugghh ootthheerr ccoommpprreehheennssiivvee iinnccoommee

The Corporation classif ies sink ing funds as fair value through other comprehensive income. Financial instruments classif ied as fair value through other comprehensive income are subsequently measured at fair value with changes in fair value recognized in other comprehensive income.

IInnvveessttmmeennttss uunnddeerr sseeccuurriittiieess lleennddiinngg pprrooggrraamm Securities lending transactions are entered into on a collateralized basis. The secur ities lent are not derecognized on the Consolidated Statement of Financial Position given that the r isk s and rewards of ownership are not transferred from the Corporation to the counterparties in the course of such transactions. The secur ities are included in the Consolidated Statement of Financial Position on the basis that the counterparties may resell or re-pledge the secur ities dur ing the time that the secur ities are in their possession. Secur ities received from counterparties as collateral are not included in the Consolidated Statement of Financial Position given that the r isk s and rewards of ownership are not transferred from the counterparties to the Corporation in the course of such transactions. SSttrruuccttuurreedd sseettttlleemmeennttss In the normal course of insurance claim adjudication, the Corporation settles certain long-term claims losses through the purchase of annuities under structured settlement arrangements with life insurance companies. As the Corporation does not retain any interest in the related insurance contract and obtains a legal release from the claimant, any gain or loss on the purchase of the annuity is recognized in the Consolidated Statement of Comprehensive Income at the date of the purchase and the related claims liabilities are derecognized. However , the Corporation remains exposed to the credit r isk that the life insurance companies may fail to fulf ill their obligations (Note 8(f)(i i i)). DDeerriivvaattiivvee iinnssttrruummeennttss

The Corporation utilizes a var iety of der ivative instruments to manage its exposure to interest rate, electr icity and natural gas pr ice r isk . The terms and conditions of certain f inancial and non-financial der ivative f inancial instrument contracts require the Corporation to provide collateral when the fair value of the obligation pursuant to these contracts is in excess of exposure limits granted. When posted, these collateral amounts are recognized as margin deposits on der ivative contracts and are included with accounts receivable. In order to qualify for hedge accounting, the Corporation designates der ivatives as hedges through formal documentation of al l relationships between hedging instruments and hedged items, as well as the r isk management objective and strategy for undertak ing the hedge transaction. This process includes link ing der ivatives to specific assets and liabilities or to specific f irm commitments or forecast transactions. The Corporation formally assesses both at the hedge’s inception and on an ongoing basis, whether the der ivatives used are highly effective in offsetting changes in cash flows of the hedged item and the timing of the cash f lows is similar .


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44.. SSiiggnniiffiiccaanntt aaccccoouunnttiinngg ppoolliicciieess (continued) The Corporation may enter into forward contracts to hedge exposures to anticipated changes in commodity pr ices on forecasted natural gas purchases related to the Corporation’s power purchase agreements (PPAs) and bond forward agreements to hedge exposures to anticipated changes in interest rates on certain forecasted issuances of long-term debt. The Corporation has chosen to designate these contracts as cash flow hedges. The Corporation assesses whether the der ivative designated in each hedging relationship is expected to be effective in offsetting changes in cash flows of the hedged item using the hypothetical der ivative method. The Corporation applies a hedge ratio of 1:1. As such, the effective portion of the changes in fair value related to the der ivative f inancial instruments have been recognized in other comprehensive income, with the fair value being recognized as der ivative financial assets or liabilities on the Consolidated Statement of Financial Position. Ineffective portions of hedges are recorded in profit or loss immediately . When the natural gas forward agreements are settled, the resulting gain or loss recorded in accumulated other comprehensive income is recognized in net earnings immediately. When the bond forward agreements expire upon the issuance of long-term debt, the resulting gain or loss recorded in accumulated other comprehensive loss is amortized to net earnings over the term of the debt. I f no debt is issued, the gain or loss is recognized in net earnings immediately. Der ivative instruments not designated as a hedge are classif ied as fair value through profit or loss and are recorded at fair value in the Consolidated Statement of Financial Position in current assets or current liabilities, as descr ibed in Note 8, commencing on the trade date. The change in the fair value is recorded in net earnings and classif ied within the revenue or expense category to which it relates. The revenue and expense categories impacted are descr ibed in Note 8(b).

Certain commodity contracts for the physical purchase of natural gas qualify as own-use contracts. The Corporation entered into these contracts for the purpose of physical receipt of the natural gas in accordance with its own expected usage requirements for the generation of electr icity and sales requirements for commodity customers. As such, these non-financial der ivative contracts are not recorded at fair value on the Consolidated Statement of Financial Position; rather , the contracts are accounted for as a purchase at the time of delivery. Der ivatives may be embedded in hybr id contracts that also include a non-der ivative host. I f a hybr id contract contains a host that is a f inancial asset within the scope of IFRS 9, the entire contract is classif ied as a f inancial asset. I f a hybr id contract contains a host that is not an asset with the scope of IFRS 9, an embedded der ivative is treated as separate der ivative when the economic character istics and r isk s are not clear ly and closely related to those of the host instrument, when the embedded der ivative has the same terms as those of a stand-alone der ivative, and the combined contract is not measured at fair value with changes in fair value recognized in profit or loss. These embedded der ivatives are typically measured at fair value with subsequent changes recognized in net earnings.

The Corporation utilizes natural gas sales contracts with embedded der ivatives for non-regulated contract sales to large end-use customers.

90 CIC Consolidated


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jj)) IImmppaaiirrmmeennttss FFiinnaanncciiaall aasssseettss The Corporation recognizes loss allowances for expected credit losses (ECLs) on financial assets measured at amortized cost and debt instruments designated as fair value through other comprehensive income (FV OCI). The Corporation measures loss allowances for accounts receivables at an amount equal to lifetime ECL. Debt instruments and other receivables that are determined to have low credit r isk at the reporting date are measured at 12-month ECL. The Corporation considers a debt instrument to have low credit r isk when its credit r isk rating is A or higher (investment grade). When determining whether the credit r isk of a f inancial asset has increased, the Corporation performs a quantitative and qualitative analysis based on the Corporation’s histor ical exper ience and forward-look ing information. The Corporation assumes that the credit r isk on a f inancial asset has increased significantly if i t is between 30-120 days past due. The Corporation considers a f inancial asset to be in default when the borrower is unlik ely to pay its credit obligations to the Corporation in full, without recourse by the Corporation to actions such as realizing secur ity. Loss allowances for f inancial assets measured at amortized cost are deducted from the gross carrying amount of the assets and recognized in net earnings. For debt instruments at FV OCI, the loss allowance is charged to net earnings and is recognized in other comprehensive income (OCI). The gross carrying amount of a f inancial asset is written off to the extent that there is no realistic prospect of recovery. NNoonn--ffiinnaanncciiaall aasssseettss The carrying amounts of non-financial assets, other than inventor ies, are reviewed at each reporting date to determine whether there is any indication of impairment. I f any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each per iod. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inf lows of other assets or groups of assets (the “ cash-generating unit” , or “ CGU” ). The recoverable amount of an asset or CGU is the greater of its value-in-use and its fair value less costs to sell. In assessing value-in-use, the estimated future cash flows are discounted to present value using a discount rate that reflects current mark et assessments of the time value of money and the r isk s specific to the asset. For the purposes of goodwill impairment testing, goodwill acquired in a business combination is allocated to the CGU, or the group of CGUs, that is expected to benefit from the synergies of the combination. This allocation is subject to an operating segment ceiling test and reflects the lowest level at which that goodwill is monitored for internal reporting purposes. An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in net earnings. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro-rata basis.


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An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in pr ior per iods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Goodwill that forms part of the carrying amount of an investment in an associate is not recognized separately, and therefore is not tested for impairment separately. Instead, the entire amount of the investment in an associate is tested for impairment as a single asset when there is objective evidence that the investment in an associate may be impaired.

kk)) PPrroovviissiioonnss

A provision is recognized if , as a result of a past event, the Corporation has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation, the timing or amount of which is uncertain. Provisions are determined by discounting the expected future cash flows at a rate that reflects current mark et assessments of the time value of money and the r isk s specific to the obligation or at the best estimate to settle the obligation at the end of the reporting per iod. The unwinding of the discount on provisions is recognized as f inance expenses.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is vir tually cer tain that reimbursement will be received and the amount of the receivable can be measured reliably.

DDeeccoommmmiissssiioonniinngg pprroovviissiioonnss

A decommissioning provision is a legal or constructive obligation associated with the decommissioning of a long-lived asset. The Corporation recognizes decommissioning provisions in the per iod incurred if a reasonable estimate of fair value (net present value) can be determined. The Corporation recognizes provisions to decommission coal, natural gas, cogeneration and wind generation facilities in the per iod in which the facility is commissioned. The fair value of estimated decommissioning costs is recorded as a provision with an offsetting amount capitalized and included as part of property, plant and equipment. Decommissioning provisions are increased per iodically for the passage of time by calculating accretion expense on the provision. The offsetting capitalized costs are depreciated over the estimated useful life of the related asset. The calculations of fair value are based on detailed studies that tak e into account var ious assumptions regarding the anticipated future cash flows including the method and timing of decommissioning and an estimate of future inflation. Decommissioning provisions are per iodically reviewed and any changes in the estimated timing and amount of future cash flows, as well as changes in the discount rate, are recognized as an increase or decrease in the carrying amount of the liability and the related asset. I f the asset is fully depreciated, the changes are recognized in net earnings immediately.

92 CIC Consolidated


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EEnnvviirroonnmmeennttaall rreemmeeddiiaattiioonn A provision for environmental remediation is accrued when the occurrence of an environmental expenditure, related to present or past activities of the Corporation, is considered probable and the costs of remedial activities can be reasonably estimated. These estimates include costs for investigations and remediation at identif ied sites. These provisions are based on management’s best estimate consider ing current environmental laws and regulations and are recorded at fair value. The Corporation reviews its estimates of future environmental expenditures on an ongoing basis. Changes in the estimated timing and amount of future cash flows, as well as changes in the discount rate, are recognized in net earnings immediately. UUnnppaaiidd iinnssuurraannccee ccllaaiimmss

The provision for unpaid claims represents an estimate of the total cost of outstanding claims. The estimate includes the cost of reported claims, claims incurred but not reported, an estimate of adjustment expenses to be incurred on these claims and a provision for adverse deviation in accordance with Canadian Institute of Actuar ies’ Standards. The estimates are necessar ily subject to uncertainty and are selected from a range of possible outcomes. During the life of the claim, adjustments to the estimates are made as additional information becomes available. The change in outstanding losses plus paid losses is reported as claims incurred in the current per iod and is included in net earnings.

ll)) RReevveennuuee NNaattuurraall ggaass ssaalleess aanndd ddeelliivveerryy Revenue from natural gas sales contracts with customers is recognized when the Corporation delivers natural gas to customers, who consume the natural gas to heat their homes or operate their businesses. Title to natural gas purchased from the Corporation, and all related r isk s, remain with the Corporation until the gas is transferred at a meter point. At the meter point, the customer tak es ownership of the natural gas and the performance obligation is satisfied. The commodity charge is then billable to the customer as there are no future performance obligations outstanding.

The Corporation has the exclusive r ight to distr ibute natural gas within the province of Sask atchewan. A delivery service contract generates revenue from the transportation of natural gas to customers. Delivery revenue is recognized when natural gas is transferred to customers at their meter point and the performance obligation is satisfied. The transaction pr ice is allocated to natural gas sales and delivery service based on the applicable rates der ived through the review process with the Sask atchewan Rate Review Panel. An estimate of natural gas delivered, but not billed, is included in net earnings.

NNaattuurraall ggaass ttrraannssppoorrttaattiioonn aanndd ssttoorraaggee In transportation and storage services, the performance obligation is satisfied when the transportation and storage services are complete and billed monthly. An estimate of transportation, storage and related services rendered, but not billed, is included in net earnings.


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44.. SSiiggnniiffiiccaanntt aaccccoouunnttiinngg ppoolliicciieess (continued) EElleeccttrriicciittyy Revenues from contracts with customers are der ived from the generation, transmission, distr ibution, purchase and sale of electr icity and related products and services. Contracts are evaluated to determine if they meet the definition of a contract with a customer at the inception of the contract and on an ongoing basis if there is an indication of significant changes in facts and circumstances. Revenue is measured based on the transaction pr ice specified in a contract with a customer . Revenue is also recognized when control over a promised good or service is transferred to the customer and the Corporation is entitled to consideration as a result of completion of the performance obligation. A contract asset or contract liability is recognized for the contracts where either party has performed. A contract liability is recorded when the Corporation receives consideration before the performance obligations have been satisfied. A contract asset is recorded when the Corporation has r ights to consideration for the completion of a performance obligation when that r ight is conditional on something other than the passage of time. The Corporation recognizes unconditional r ights to consideration separately as a receivable. Contract assets and receivables are evaluated at each reporting period to determine whether there is any objective evidence that they are impaired. Significant judgment may be required to identify the number of distinct performance obligations within a contract and the allocation of the transaction pr ice to multiple performance obligations in a contract, and to determine when performance obligations have been satisfied. Electr icity sales contracts are deemed to have a single performance obligation as the promise to transfer individual goods or services is not separately identif iable from other obligations in the contracts and therefore not distinct. These performance obligations are satisfied over time as electr icity is delivered because of the continuous transfer of control to the customer . The method of revenue recognition for the electr icity is an output method, which is based on the volume delivered to the customer and includes an estimate of electr icity deliver ies not yet billed at year end. Electr icity export sales are recognized upon delivery to the customer and include an estimate of electr icity deliver ies not yet billed at year end. Electr icity trading revenues are reported on a net basis upon delivery of electr icity to the customers and receipt of electr icity purchased from external parties. Electr icity trading contracts are recorded at fair value.

TTeelleeccoommmmuunniiccaattiioonnss Telecommunications revenue is measured based on the value of the expected consideration in a contract with a customer and excludes sales taxes and other amounts collected on behalf of third parties. Revenue is recognized when control of a product or service is transferred to a customer . When the Corporation’s r ight to consideration from a customer corresponds directly with the value to the customer of the products and services transferred to date, the Corporation recognizes revenue in the amount to which the Corporation has a r ight to invoice.

94 CIC Consolidated


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For multiple element arrangements, the Corporation accounts for individual products and services when they are separately identif iable, and the customer can benefit from the product or service on its own. The total arrangement consideration is allocated to each product or service included in the contract with the customer based on its stand-alone selling pr ice. Stand-alone selling pr ices are generally determined based on the observable pr ices at which the Corporation sells products separately without a service contract and pr ices for non-bundled service offer ings with the same range of services, adjusted for mark et conditions and other factors, as appropriate. When similar products and services are not sold separately, the Corporation uses the expected cost plus margin approach to determine stand-alone selling pr ices. Products and services purchased by a customer in excess of those included in the bundled arrangement are accounted for separately.

Wireless revenue is pr incipally generated from providing integrated digital wireless voice and data communications products and services to residential and business customers. For wireless products and services that are sold separately, customers usually pay in full at the point of sale for products and on a monthly basis for services. For wireless products and services sold in multiple element arrangements, customers pay monthly over a contract term of up to 24 months for residential customers and up to 36 months for business customers.

Revenue is also generated from providing data (including internet access and internet protocol television), local telephone, long distance and connectivity, secur ity services and other communications services and products to residential and business customers. Revenue also includes amounts from the Corporation’s wholesale business, which sells telecommunication services from or to resellers and other carr iers.

Product revenue from the sale of equipment is recognized when a customer tak es possession of the product. Service revenue is recognized over time, as the services are provided. Revenue on certain long-term contracts is recognized using output methods based on products delivered, performance completed to date, time elapsed or milestones met. For multiple element arrangements, stand-alone selling pr ices are determined using observable pr ices adjusted for mark et conditions and other factors, as appropriate, or the expected cost plus margin approach for customized business arrangements.

PPrrooppeerrttyy aanndd ccaassuuaallttyy iinnssuurraannccee The Corporation’s property and casualty insurance policies have all been classif ied upon inception as insurance contracts. An insurance contract is a contract that transfers significant insurance r isk and, upon the occurrence of the insured event, causes the insurer to mak e a benefit payment to the insured party. The sale of policies generates premiums written and are recorded in revenue over the terms of the related policies, no longer than twelve months. The portion of the policy premiums relating to the unexpired term of each policy is recorded as an unearned insurance premium (Note 18). At the end of each per iod, a liability adequacy test is performed to validate the adequacy of unearned insurance premiums (Note 18) and deferred policy acquisition costs (included in prepaid expenses on the Consolidated Statement of Financial Position). A premium deficiency would ex ist if unearned insurance premiums are deemed insufficient to cover the estimated future costs associated with the unexpired portion of written insurance policies. A premium deficiency would be recognized immediately as a reduction of prepaid expenses to the extent that unearned insurance premiums plus anticipated finance income is not considered adequate to cover all deferred policy acquisition costs and related insurance claims and expenses. I f the premium deficiency is greater than the unamortized deferred policy acquisition costs, an unearned insurance premium liability is accrued for the excess deficiency.


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44.. SSiiggnniiffiiccaanntt aaccccoouunnttiinngg ppoolliicciieess (continued) GGaammiinngg

Gaming revenue (table and slot revenues) represents the net win from gaming activities, which is the difference between the amounts wagered and the payouts by the casino. Gaming revenues are net of accruals for anticipated payouts of progressive jack pots. CCuussttoommeerr ccoonnttrriibbuuttiioonnss The Corporation obtains customer contr ibutions related to the construction of new natural gas, electr icity, water and wastewater service connections. Customer contr ibution contracts for natural gas and electr icity services are deemed to have a single performance obligation. These performance obligations are satisfied at a point in time and recognized in net earnings. The customer contr ibutions are recognized initially as contract liabilities and are recognized into net earnings once the related property, plant and equipment is available for use. The transaction pr ice is the estimated construction charge for the connection. These customer contr ibutions are often subject to refunds over a specified per iod. An estimate of these refunds remains in deferred revenue until the eligible refund per iod expires. Customer contr ibutions received from water and wastewater customers are recognized initially as contract liabilities when there is reasonable assurance that they will be received and the Corporation will comply with the conditions associated with the customer contract. The contr ibutions are then recognized into net earnings on a systematic basis over the life of the related customer contract. I f there is no customer contract in place, the contr ibutions are recognized into revenue on a systematic basis over the life of the related assets.

OOtthheerr Revenue from sales of other products is recognized when goods are shipped and title has passed to the customer or based on the r ight to revenue pursuant to contracts with customers, tenants and clients.

mm)) GGoovveerrnnmmeenntt ggrraannttss

Conditional government grants are initially measured at fair value and recognized as other liabilities provided that there is reasonable assurance that the grant will be received and the Corporation will comply with the conditions associated with the grant. Grants that compensate the Corporation for expenses incurred are recognized in net earnings in the same per iod in which the expenses are recognized. Grants that compensate the Corporation for the cost of an asset are capitalized and recognized in net earnings over the useful life of the asset.

nn)) FFoorreeiiggnn ccuurrrreennccyy ttrraannssaaccttiioonnss

Transactions in foreign currencies are translated to Canadian dollars at exchange rates at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Canadian dollars at the exchange rate at that date. Non-monetary assets and liabilities are translated using the exchange rates on the date of the transactions. Foreign currency differences ar ising on translation are recognized in net earnings.

96 CIC Consolidated


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oo)) EEmmppllooyyeeee ffuuttuurree bbeenneeffiittss The Corporation has three defined benefit pension plans, a defined contr ibution pension plan, and other plans that provide post-retirement benefits for its employees. DDeeffiinneedd ccoonnttrriibbuuttiioonn ppeennssiioonn ppllaann A defined contr ibution plan is a post-employment benefit under which the Corporation pays f ixed contr ibutions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contr ibutions to the defined contr ibution pension plan are recognized as an employee future benefit expense in net earnings in the per iod dur ing which services are rendered by employees. Prepaid contr ibutions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.

A defined benefit pension plan is a post-employment benefit plan in which the Corporation’s net obligation is calculated by estimating the discounted amount of future benefit that employees have earned in return for service in the current and pr ior periods and deducting the fair value of plan assets. The calculation of the net defined benefit pension obligation or asset is performed annually by a qualif ied actuary using the projected unit credit method. When the calculation results in a potential asset, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the defined benefit pension plans or reductions in future contr ibutions to the pension plans. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements. Remeasurements of the net defined benefit pension obligation or asset are comprised of actuar ial gains and losses, the return on plan assets (excluding interest), and the effect of the asset ceiling (if any, excluding interest), and are recognized immediately in OCI. The net interest expense (income) on the net defined benefit pension plan obligation or asset is determined by applying the discount rate used to measure the defined benefit pension plan obligation or asset at the beginning of the per iod, to the net defined benefit pension plan obligation or asset, tak ing into account any changes in the net defined pension plan obligation or asset dur ing the per iod as a result of contr ibutions and benefit payments. Net interest expense related to the defined benefit pension plans is recognized immediately in net earnings as part of f inance expenses. When the benefits of the defined benefit pension plans are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in net earnings. The Corporation recognizes gains and losses on the settlement of defined benefit pension plans when the settlement occurs. The discount rate used to determine the benefit obligation and the fair value of plan assets is determined by reference to mark et interest rates of high-quality debt instruments at the measurement date, with cash flows that match the timing and amount of expected benefit payments.


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44.. SSiiggnniiffiiccaanntt aaccccoouunnttiinngg ppoolliicciieess (continued) OOtthheerr ddeeffiinneedd bbeenneeffiitt ppllaannss The Corporation’s obligation in respect of employee future benefits other than pension plans is the discounted estimated amount of future benefit that employees have earned in return for service in the current and pr ior per iods. The discount rate used to determine the benefit obligation is determined by reference to mark et interest rates at the measurement date of high-quality debt instruments, with cash flows that match the timing and amount of expected benefit payments. The calculation is performed by a qualif ied actuary using the projected unit credit method. Remeasurements, consisting of actuar ial gains and losses, are recognized immediately in OCI. Net interest expense on the other defined benefit obligation is recognized immediately in net earnings as part of f inance expenses.

The Corporation has not established a trust nor does it hold property for the specific purpose of providing benefits to the participants of these plans. Benefits are funded by the current operations of the Corporation.

pp)) SShhoorrtt--tteerrmm eemmppllooyyeeee bbeenneeffiittss Short-term employee benefit obligations are expensed as the related service is provided.

qq)) AAsssseettss hheelldd--ffoorr--ssaallee aanndd ddiissccoonnttiinnuueedd ooppeerraattiioonnss

Assets (or disposal groups comprising assets and liabilities) that are expected to be recovered pr imarily through sale, rather than continuing use, are classif ied as held-for-sale. Immediately before classif ication as held-for-sale, the assets (or components of a disposal group) are re-measured in accordance with the Corporation’s accounting policies. Thereafter , generally the assets (or disposal group) are measured at the lower of the carrying amount and the fair value less costs to sell. Any impairment loss on a disposal group is f irst allocated to goodwill, and then to the remaining assets and liabilities on a pro-rata basis; except that no loss is allocated to inventor ies, employee future benefit assets, or investment property, which continue to be measured in accordance with the Corporation’s accounting policies. Impairment losses on initial classif ication as held-for-sale and subsequent gains and losses on re-measurement are recognized in net earnings. Gains are not recognized in excess of cumulative impairment losses. A discontinued operation is a component of the Corporation’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held-for-sale. Classif ication as a discontinued operation occurs upon disposal or when the operation meets the cr iter ia to be classif ied as held-for-sale if ear lier . When an operation is classif ied as a discontinued operation, the comparative Consolidated Statement of Comprehensive Income is reclassif ied as if the operation had been discontinued from the start of the comparative year (Note 10).

rr)) FFiinnaannccee iinnccoommee aanndd eexxppeennsseess

Finance income comprises sink ing fund earnings, interest income on investments at fair value through profit or loss, gains on sale of investments at fair value through profit or loss, changes in fair value of f inancial assets at fair value through profit or loss, and interest income from defined benefit pension plans.

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Finance expenses comprise interest expense on financial liabilities measured at amortized cost, changes in the fair value of f inancial assets at fair value through profit or loss, accretion expense on provisions less interest capitalized, interest costs on defined benefit pension plans and other defined benefit plans, and amounts amortized to net earnings from accumulated other comprehensive loss. Borrowing costs that are directly attr ibutable to the acquisition, construction, or production of a qualifying asset form part of the cost of that asset, with a corresponding decrease in f inancing expenses.

On the Consolidated Statement of Cash Flows, interest paid is classif ied as an operating activity, interest received is classif ied as an investing activity, dividends received are classif ied as an investing activity and dividends paid are classif ied as a f inancing activity .

ss)) LLeeaasseess

A contract contains a lease i f the contract conveys a r ight to control the use of an identif ied asset for a per iod of time in exchange for consideration. The Corporation has assessed its arrangements to determine whether they contain a lease.

Right-of-use assets are initially measured at an amount equal to the lease liability and are adjusted for any payments made at or before the commencement date, less any lease incentives received. Right-of-use assets are depreciated over the related lease term. The Corporation has applied judgment to determine the lease term for contracts that include renewable options. The assessment of whether the Corporation is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and r ight-of-use assets recognized (Notes 14 and 20). The corresponding lease liability is measured at the present value of the lease payments that are not paid at commencement and are discounted using the Corporation’s incremental borrowing rate or the rate implicit in the lease. Each lease payment is allocated between the liability and interest to achieve a constant rate on the finance balance outstanding. The interest component is included in f inance expense. The lease liability is remeasured when there is a change in future lease payments ar ising from a change in an index or rate, or if there is a change in the Corporation’s estimate or assessment of whether it will exercise an extension, termination, or purchase option. A compensating adjustment is made to the r ight-of-use asset or is recorded in the Consolidated Statement of Comprehensive Income if the carrying amount of the r ight-of-use asset has been reduced to zero (Notes 14 and 20). Payments for short-term and low value leases are recognized as an operating expense. V ar iable lease payments that do not depend on an index or rate are not included in the measurement of the lease liability and the r ight-of-use asset and are recognized as an expense in the per iod in which the event or condition that tr iggers that payment occurs.

tt)) NNeeww aaccccoouunnttiinngg ssttaannddaarrddss nnoott yyeett aaddoopptteedd

Certain new standards were issued by the International Accounting Standards Board (IASB) or International Financial Reporting Interpretations Committee that are not yet effective for the year ended March 31, 2020. These include:

IIFFRRSS 1177,, IInnssuurraannccee CCoonnttrraaccttss IFRS 17, Insurance Contracts was issued in May 2017 and will replace IFRS 4. The intent of the standard is to establish consistent recognition, measurement, presentation and disclosure pr inciples to provide relevant and comparable reporting of insurance contracts across jur isdictions.


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44.. SSiiggnniiffiiccaanntt aaccccoouunnttiinngg ppoolliicciieess (continued) The standard requires entities to measure insurance contract liabilities as the r isk -adjusted present value of the cash flows plus the contractual service margin, which represents the unearned profit the entity will recognize as future service is provided. This is referred to as the general model. Expedients are specified, provided the insurance contracts meet certain conditions. I f , at initial recognition or subsequently, the contractual service margin becomes negative, the contract is considered onerous and the excess is recognized immediately in net earnings. The standard also includes significant changes to the presentation and disclosure of insurance contracts within entities’ f inancial statements. IFRS 17 applies to annual per iods beginning on or after January 1, 2023, with ear lier application permitted if IFRS 15 and IFRS 9 are also adopted. The standard is to be applied retrospectively unless impracticable, in which case a modified retrospective approach or fair value approach is to be used for transition. While ear ly adoption is permitted under the standard, the Office of the Superintendent of Financial Institutions (OSFI) has indicated that ear ly adoption is not allowed. While the Corporation is not federally regulated, it generally follows OSFI ’s guidance in such matters. The standard represents a comprehensive IFRS accounting model for insurance contracts and is expected to have a significant impact on financial reporting on the Corporation’s property and casualty insurance segment. The Corporation is evaluating the impact this standard will have on the consolidated financial statements.

55.. SSttaattuuss ooff CCIICC CIC was established by Order in Council 535/47 dated April 2, 1947 and is continued under the provisions of The Crown Corporations Act, 1993. CIC is an agent of Her Majesty in Right of the Province of Sask atchewan and as a provincial Crown corporation is not subject to federal and provincial income taxes. Certain associates, joint ventures, joint operations and subsidiar ies are not provincial Crown corporations and are subject to federal and provincial income taxes.

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66.. CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss (thousands of dollars)

2020 2019 Cash $ 314,355 $ 123,475 Short-term investments 84,953 76,121 $ 399,308 $ 199,596 The weighted average interest rate for short-term investments included in cash and cash equivalents at March 31, 2020 was 1.5 per cent (2019 - 1.7 per cent).

77.. IInnvveessttmmeennttss (thousands of dollars)

2020 2019 Short-term investments Short-term investments - at fair value through profit or loss $ 127,935 $ 125,355 Loans receivable - amortized cost 1,853 17,064 Bonds and debentures - amortized cost 46,723 - S ink ing funds - at fair value through other comprehensive income (a) 134,894 3,493

$ 311,405 $ 145,912 Portfolio investments Portfolio investments - at fair value through profit or loss $ 377,497 $ 391,581

Bonds, debentures and loans receivable Bonds and debentures - at fair value through profit or loss 577,268 283,122 Bonds and debentures - amortized cost 6,024 53,040 Loans receivable - amortized cost 8,593 6,275 591,885 342,437

Sinking funds - at fair value through other comprehensive income (a) 1,063,418 1,061,338 $ 2,032,800 $ 1,795,356

Securities lending program (b)

Short-term investments Short-term investments - at fair value through profit or loss $ - $ 31,811

Portfolio investments

Portfolio investments - at fair value through profit or loss $ - $ 10,388 Bonds and debentures

Bonds and debentures - at fair value through profit or loss - 193,965 $ - $ 204,353


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77.. IInnvveessttmmeennttss (continued)

a) Changes in the carrying amount of sink ing funds are as follows (thousands of dollars):

2020 2019

Sink ing funds, beginning of year $ 1,064,831 $ 935,587 Net installments 75,921 80,501 Earnings 33,256 24,260 Unrealized gains 24,304 24,483 Sink ing funds, end of year 1,198,312 1,064,831

Less current portion (134,894) (3,493)

$ 1,063,418 $ 1,061,338

Sink ing fund installments due in each of the next f ive years are as follows (thousands of dollars): 2021 $ 91,799

2022 86,356 2023 83,466 2024 80,882 2025 80,382

b) Through its custodian, the Corporation participates in an investment secur ities lending program for the

purpose of generating fee income. While in the possession of counterparties, the loaned secur ities may be resold or repledged by such counterparties.

At March 31, 2020, the Corporation held no collateral (2019 - $248.0 million) for the loaned secur ities, as there were no secur ities on loan.

88.. FFiinnaanncciiaall aanndd iinnssuurraannccee rriisskk mmaannaaggeemmeenntt

FFiinnaanncciiaall rriisskk mmaannaaggeemmeenntt The Corporation is exposed to mark et r isk (power generation, natural gas sales, equity pr ices, sink ing funds, foreign exchange rates, and interest rates), credit r isk , and liquidity r isk . The Corporation utilizes a number of f inancial instruments to manage mark et r isk . The Corporation mitigates these r isk s through policies, limits on use and amount of exposure, internal monitor ing, and compliance reporting to senior management and the Board. Fair value is the pr ice that would be received to sell an asset or paid to transfer a liability in an order ly transaction between mark et participants at the measurement date. Fair values are estimates using present value and other valuation techniques which are significantly affected by the assumptions used concerning the amount and timing of estimated future cash flows and discount rates that reflect varying degrees of r isk .



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88.. FFiinnaanncciiaall aanndd iinnssuurraannccee rriisskk mmaannaaggeemmeenntt (continued)

Therefore, due to the use of judgement and future-or iented information, aggregate fair value amounts should not be interpreted as being realizable in an immediate settlement of the instruments. (thousands of dollars) 2020 2019

Carrying Carrying Financial Instruments Classification Amount Fair Value Amount Fair V alue Financial Assets Cash and cash equivalents FV TPL $ 399,308 $ 399,308 $ 199,596 $ 199,596 Accounts receivable AC 1,033,040 1,033,040 1,092,955 1,092,955 Der ivative f inancial assets FV TPL 22,102 22,102 45,446 45,446 Restricted cash and cash equivalents FV TPL 4,567 4,567 4,592 4,592 Investments - fair value FV TPL 1,082,700 1,082,700 1,036,222 1,036,222 Investments - sink ing funds FV OCI 1,198,312 1,198,312 1,064,831 1,064,831 Investments - amortized cost AC 63,193 63,163 76,379 76,307 Financial Liabilities Bank indebtedness FV TPL - - 6,426 6,426 Trade and other payables AC 892,964 892,964 825,639 825,639 Der ivative f inancial liabilities FV TPL 105,373 105,373 153,498 153,498 Notes payable AC 1,449,573 1,449,573 1,470,186 1,470,186 Long-term debt AC 8,892,633 10,283,692 8,325,089 9,778,038

2020 2019 Derivative Instruments Classification Asset (Liability) Asset (Liability) Physical natural gas contracts FV TPL $ 14,719 $ (21,808) $ 40,915 $ (16,688) Natural gas pr ice swaps FV TPL 4,106 (83,565) 1,327 (136,810) Physical electricity forwards FV TPL 3,277 - 3,204 - $ 22,102 $ (105,373) $ 45,446 $ (153,498)

Classif ication details are:

FV TPL - measured mandator ily at fair value through profit or loss FV OCI - fair value through other comprehensive income AC - amortized cost


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aa)) FFaaiirr vvaalluuee hhiieerraarrcchhyy

Fair value measurements are categorized into levels within a fair value hierarchy based on the nature of inputs used in the valuation.

Level 1 - Unadjusted quoted pr ices for identical assets or liabilities are readily available from an active

mark et. The Corporation defines an active mark et based on the frequency of valuation, any restr ictions or ill iquidity on disposition of the underlying asset or liability, and trading volumes.

Level 2 - Inputs, other than quoted pr ices included in level 1, that are observable either directly or indirectly.

Level 3 - Inputs are not based on observable mark et data.

The Corporation’s f inancial instruments are categorized within this hierarchy as follows (thousands of dollars):

2020 Level 1 Level 2 Level 3 Total

Cash and cash equivalents $ 399,308 $ - $ - $ 399,308 Restricted cash and cash equivalents 4,567 - - 4,567 Notes payable 1,449,573 - - 1,449,573 Investments - FV TPL 182,047 705,020 195,633 1,082,700 Investments - FV OCI - 1,198,312 - 1,198,312 Investments - AC - 63,163 - 63,163 Long-term debt - 10,283,692 - 10,283,692 Physical natural gas contracts - net - (7,089) - (7,089) Natural gas pr ice swaps - net - (79,459) - (79,459) Physical electricity forwards - net - 3,277 - 3,277

2019 Level 1 Level 2 Level 3 Total

Cash and cash equivalents $ 199,596 $ - $ - $ 199,596 Restricted cash and cash equivalents 4,592 - - 4,592 Bank indebtedness 6,426 - - 6,426 Notes payable 1,470,186 - - 1,470,186 Investments - FV TPL 225,785 633,714 176,723 1,036,222 Investments - FV OCI - 1,064,831 - 1,064,831 Investments - AC - 76,307 - 76,307 Long-term debt - 9,778,038 - 9,778,038 Physical natural gas contracts - net - 24,227 - 24,227 Natural gas pr ice swaps - net - (135,483) - (135,483) Physical electricity forwards - net - 3,204 - 3,204



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The changes in level 3 investments carr ied at fair value are as follows (thousands of dollars):

2020 2019 Balance, beginning of year $ 176,723 $ 172,911

Unrealized gains attr ibutable to assets held at the end of the year included in impairment losses 2,476 3,957

Purchases 32,444 12,191 Sales (16,010) (11,939) Other - (397)

Balance, end of year $ 195,633 $ 176,723

During the year , no investments were transferred between levels.

IInnvveessttmmeennttss ccaarrrriieedd aatt ffaaiirr vvaalluuee tthhrroouugghh pprrooffiitt oorr lloossss

ii)) CCaatteeggoorriizzeedd aass lleevveell 22

Investments carr ied at fair value through profit and loss and categorized as level 2 in the hierarchy include sink ing funds, bonds, and debentures. The fair value of sink ing funds is determined by the Sask atchewan Ministry of Finance, using a mark et approach, with information provided by investment dealers. To the extent possible, valuations reflect indicative secondary pr icing for these secur ities. In all other circumstances, valuations are determined with reference to similar actively traded instruments. The fair value of bonds and debentures is der ived from mark et pr ice data for same or similar instruments obtained from the investment custodian, investment managers or dealer mark ets.

iiii)) CCaatteeggoorriizzeedd aass lleevveell 33

Determining fair value for the Corporation’s level 3 investments, which are not publicly traded and recorded at fair value through profit or loss, requires application of professional judgement and use of estimates. Significant assumptions used by the Corporation to estimate include the timing and amount of future cash flows, anticipated economic outlook for the investee’s industry, impact of pending or potential regulation or legislation, forecast consumer tastes, emergence of substitute products, anticipated fluctuations in commodities pr ices, and macro-economic demand. Significant aspects of professional judgement include selecting an appropriate valuation approach, determining a range of appropriate r isk -adjusted rates of return for a ser ies of cash flows, and assessing the r isk inherent in cash flows, the probabilities of micro and macro-economic var iables occurr ing, and probabilities of potentially significant company, industry, or economic factors occurr ing or failing to occur as the case may be.


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Level 3 includes a pooled mortgage fund and a real estate fund. The fair value of these investments is based on the Corporation’s share of the net asset value of the respective fund, as determined by its investment manager , and used to value purchases and sales of units in the investments. The fair value for the pooled mortgage fund is determined based on mark et values of the underlying mortgage investments, calculated by discounting scheduled cash flows through to the estimated matur ity of the mortgages (using spread-based pr icing over Government of Canada bonds with a similar term to matur ity), subject to adjustments for liquidity and credit r isk . The fair value of the pooled real estate fund is determined based on the most recent appraisals of the underlying properties. Real estate properties are appraised semi-annually by external, independent professional real estate appraisers who are accredited through the Appraisals Institute of Canada. Real estate appraisals are performed in accordance with generally accepted appraisal standards and procedures and are based pr imarily on the discounted cash flow and income capitalization methods. Where evidence of a recent arm’s length transaction has occurred in the shares of an unlisted equity position held by the Corporation, the Corporation considers such a transaction to generally provide a good indication of fair value. Where a recent arm’s length transaction has not occurred, or secondary indicators exist which would question the applicability of a recent transaction, the Corporation considers alternative valuation methodologies. These methods are pr imarily focused on the projected earnings or cash flows of the business, discounted to present value by applying a discount rate which appropriately reflects industry and company specific r isk factors. In circumstances where fair value cannot be estimated reliably, a level 3 investment is reported at the carrying value at the previous reporting date unless there is evidence that the investment has since been impaired. All recorded values of investments are reviewed at each reporting date for any indication of impairment and adjusted accordingly.

LLoonngg--tteerrmm ddeebbtt

The fair value of long-term debt is determined using an income approach. Fair values are estimated using the present value of future cash flows, discounted at the mark et rate of interest for the equivalent Province of Sask atchewan debt instruments.

DDeerriivvaattiivvee ffiinnaanncciiaall aasssseettss aanndd lliiaabbiilliittiieess The fair value of electr icity-related der ivatives, physical natural gas contracts and natural gas pr ice swaps is determined using a mark et approach. The Corporation obtains quoted mark et pr ices from sources such as the New York Mercantile Exchange, the Natural Gas Exchange, independent pr ice publications, and over-the-counter brok er quotes. The fair value of natural gas pr ice options is determined using an industry-standard valuation model which requires the use of var ious assumptions, including quoted mark et values, interest rates, and volatility estimates for forward natural gas pr ices that are based on external mark et sources. Where contract pr ices are referenced to an index pr ice that has been fixed, the mark et pr ice has been used to estimate the contract pr ice.

Bond forward fair values are determined using internal discounted cash flow models that rely on Government of Canada bond yields provided by independent reference dealers. The contracted cash flows are discounted using observable yield curves.



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Foreign exchange forward fair values are determined using quoted mark et pr ices in active mark ets for similar f inancial instruments or current rates offered for f inancial instruments of similar matur ity, as well as discounted future cash flows determined using current rates for similar f inancial instruments of similar matur ities subject to similar r isk s.

OOtthheerr ffiinnaanncciiaall aasssseettss aanndd lliiaabbiilliittiieess

Other f inancial assets and liabilities including accounts receivable and trade and other payables have not been classif ied in the fa ir value hierarchy given that carrying value approximates fair value due to immediate or short-term matur ity.

bb)) UUnnrreeaalliizzeedd ((lloosssseess)) ggaaiinnss oonn ffiinnaanncciiaall iinnssttrruummeennttss

Depending on the nature of the der ivative instrument and mark et conditions, the change in fair value of der ivative f inancial assets and der ivative f inancial liabilities is recorded in net earnings as either revenue or operating expenses. The impact of unrealized (losses) gains on net earnings is as follows (thousands of dollars):

2020 2019

Revenue $ (594) $ (3,705) Operating expenses (31,044) 17,779 (Decrease) increase in net earnings $ (31,638) $ 14,074

cc)) MMaarrkkeett rriisskk

The objective of mark et r isk management is to manage and control mark et r isk exposures within acceptable parameters while optimizing return. The Corporation manages the following mark et r isk s:

PPoowweerr ggeenneerraattiioonn The Corporation is exposed to natural gas pr ice r isk through natural gas purchased for its natural gas-

fired power plants and through certain power purchase agreements that have a cost component based on the mark et pr ice of natural gas. As at March 31, 2020, the Corporation had entered into financial and physical natural gas contracts to pr ice manage the following approximate percentages of its budgeted power generations natural gas purchases:

2021 44.0% 2026 22.0% 2022 43.0% 2027 13.0% 2023 39.0% 2028 4.0%

2024 33.0% 2029 1.0% 2025 29.0%


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88.. FFiinnaanncciiaall aanndd iinnssuurraannccee rriisskk mmaannaaggeemmeenntt (continued) As at March 31, 2020, the Corporation held the following instruments to hedge exposures to changes in

natural gas pr ice r isk :

More than 1 year 1-5 years 5 years

Natural gas hedges Net exposure (thousands) $ (22,362) $ (51,996) $ (5,101) Total outstanding gigajoules (thousands) 13,375 40,178 7,550 Weighted average hedged pr ice per gigajoule $ 3.43 $ 3.46 $ 3.00 Weighted average forward mark et price per gigajoule $ 1.87 $ 2.13 $ 2.26

Based on the Corporation’s March 31, 2020 closing positions on its f inancial natural gas hedges, a $1 per

gigajoule (GJ) increase in the pr ice of natural gas would have resulted in a $59.0 million (2019 - $70.0 million) improvement in unrealized mark et value adjustments recognized in net earnings in the year . This sensitivity analysis does not represent the underlying exposure to changes in the pr ice of natural gas on the remaining forecasted power generation natural gas purchases which are unhedged as at March 31, 2020.

NNaattuurraall ggaass ssaalleess

The Corporation purchases natural gas for resale to its customers. While natural gas is purchased at

f luctuating mark et pr ices, the Corporation sells natural gas to customers at a f ixed commodity rate that is reviewed semi-annually. As part of its natural gas pr ice r isk management, the Corporation uses der ivative instruments to manage the pr ice of the natural gas it buys. The Corporation’s objective is to reduce the volatility of natural gas pr ices and to have natural gas rates that are competitive to other utilities. The Corporation also purchases and sells natural gas in the open mark et to generate incremental net earnings through its natural gas mark eting activities.

The purchase or sale pr ice of natural gas may be fixed within the contract or referenced to a f loating

index pr ice. When the pr ice is referenced to a f loating index pr ice, natural gas der ivative instruments may be used to fix the settlement amount. The types of natural gas der ivative instruments the Corporation may use for pr ice r isk management include natural gas pr ice swaps, options, swaptions and forward contracts. The Corporation’s commodity pr ice r isk management strategy establishes specific hedging targets, which may dif fer depending on current mark et conditions, to guide natural gas r isk management activities. Additionally, the Corporation uses mark -to-mark et value, V aR and net exposure to monitor natural gas pr ice r isk . Based on the Corporation’s year-end closing positions, a $1 per GJ increase in natural gas pr ices would have increased net earnings, through an increase in the fair value of natural gas der ivative instruments, by $184.0 million (2019 - $44.0 million). Conversely, a $1 per GJ decrease would have decreased net earnings, through a decrease in the fair value of natural gas der ivative instruments, by $184.0 million (2019 - $44.0 million).



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EEqquuiittyy pprriiccee rriisskk

Equity pr ice r isk represents the potential for loss from changes in the value of equity investments.

The Corporation is exposed to changes in equity pr ices in Canadian and global mark ets. The fair value of these equities at March 31, 2020 was $181.9 million (2019 - $228.8 million). Individual stock holdings are diversif ied by geography, industry type, and corporate entity. No one investee or related group of investees represents greater than 10.0 per cent of the mark et value of the Corporation’s common share portfolio. As well, no one holding represents more than 10.0 per cent of the voting shares of any corporation. The Corporation’s equity pr ice r isk is assessed using V aR to measure the potential change in the value of an asset class. The V aR has been calculated based on volatility over a four-year per iod, using a 95.0 per cent confidence level. As such, it is expected that the annual change in the portfolio mark et value will fall within the range outlined in the following table 95.0 per cent of the time (19 times out of 20).

2020 2019 Asset Class (thousands of dollars) Canadian equities +/- $ 7,458 +/- $ 10,857

Global equities +/- 24,891 +/- 32,674 Global small cap equities +/- 4,875 +/- 6,867 IInntteerreesstt rraattee rriisskk The Corporation is exposed to interest rate r isk ar ising from fluctuations in interest rates on short-term and long-term debt. Interest rate r isk is managed by having an appropriate mix of f ixed and floating rate debt. When deemed appropriate, the Corporation may use der ivative f inancial instruments to manage interest rate r isk . A change in interest rates of 1.0 per cent would have a $5.9 million impact on net earnings (2019 - $4.1 million). The Corporation has on deposit with the GRF, under the administration of the Sask atchewan Ministry of Finance, $1,198.3 million (2019 - $1,064.8 million) in sink ing funds required for certain long-term debt issues. At March 31, 2020, the GRF has invested these funds pr imarily in Provincial and Federal government bonds with varying matur ities to coincide with related debt matur ities and are managed based on this matur ity prof ile and mark et conditions. The Corporation is exposed to interest rate r isk on the sink ing funds. Assuming all other var iables remain constant at March 31, 2020, a change in interest rates of 1.0 per cent would have a $91.6 million impact on net earnings (2019 - $90.6 million).

The Corporation is exposed to changes in interest rates in its f ixed income investments, including short-term investments, bonds, debentures, and pooled mortgage investments. It is estimated that a change in investment interest rates of 1.0 per cent would have a $20.1 million impact on net earnings (2019 - $18.5 million). The impact that a change in interest rates has on investment income would be partially offset by the impact the change in interest rates has on discounting of insurance claims incurred. It is estimated that a change in discounting interest rates of 1.0 per cent would have a $16.1 million impact on net earnings (2019 - $14.7 million).


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FFoorreeiiggnn ccuurrrreennccyy rriisskk The Corporation is exposed to currency r isk , pr imarily U.S. dollars, through transactions with foreign suppliers and short-term foreign commitments. The Corporation may use a combination of der ivative f inancial instruments to manage these exposures when deemed appropriate. However , the Corporation has no mater ial f inancial contracts in place to manage foreign currency r isk as of March 31, 2020. A change in the Canadian dollar versus the U.S. dollar exchange rate would have a $4.5 million impact on net earnings (2019 - $7.3 million).

dd)) CCrreeddiitt rriisskk

Credit r isk is the r isk that one party to a transaction will fail to discharge an obligation and cause the other party to incur a f inancial loss. Concentration of credit r isk relates to groups of customers or counterparties that have similar economic or industry character istics that cause their ability to meet contractual obligations to be similar ly affected by changes in economic or other conditions. The Corporation does not have mater ial concentrations of credit r isk given that the major ity of accounts receivable is diversif ied among many residential, farm and commercial customers pr imarily throughout Sask atchewan. The Corporation has concentrations of credit r isk on its loans receivable which are due from builders and developers located in Sask atchewan and therefore could be similar ly impacted by changes in the Sask atchewan economy. However , the loans are diversif ied with companies and in communities throughout Sask atchewan and therefore may not be identically impacted by changes in the overall Sask atchewan economy. Credit r isk on these loans is mitigated through the Corporation holding a secur ity interest in the units f inanced and constructed with loan proceeds and the land upon which the units are constructed. In addition, the Corporation maintains credit policies and limits to mitigate credit r isk related to short-term investments, bonds, debentures, loans, notes receivable, leases receivable and counterparties to der ivative instruments. The carrying amount of f inancial assets represents the maximum credit exposure as follows (thousands of dollars):

2020 2019 Cash and cash equivalents $ 399,308 $ 199,596 Short-term investments 311,405 177,723 Accounts receivable 1,033,040 1,092,955 Der ivative f inancial assets 22,102 45,446 Restricted cash and cash equivalents 4,567 4,592 Investments - FV TPL 954,765 879,056 Investments - FV OCI 1,063,418 1,061,338 Investments - AC 14,617 59,315 $ 3,803,222 $ 3,520,021



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The allowance for doubtful accounts, which provides an indication of potential impairment losses, is reviewed quarter ly based on an analysis of the aging of accounts receivable and an estimate of outstanding amounts that are considered to be uncollectible. Histor ically, the Corporation has not written off a significant portion of its accounts receivable balances. The allowance for doubtful accounts and the aging of accounts receivable are detailed as follows (thousands of dollars):

2020 2019 Allowance for doubtful accounts Opening balance $ 37,935 $ 35,790 Less: Accounts written off and other (23,860) (19,008) Recover ies 4,999 3,991 Provision for losses 30,916 17,162 Ending balance $ 49,990 $ 37,935 2020 2019 Accounts receivable Current $ 984,576 $ 1,036,347 30-59 Days 32,943 30,336 60-89 Days 11,969 15,182 Greater than 90 Days 53,542 49,025 Gross accounts receivable 1,083,030 1,130,890 Allowance for doubtful accounts (49,990) (37,935) Net accounts receivable $ 1,033,040 $ 1,092,955


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ee)) LLiiqquuiiddiittyy rriisskk Liquidity r isk is the r isk that the Corporation is unable to meet its f inancial commitments as they become due. CIC is a provincial Crown corporation and as such has access to capital mark ets through the GRF. The Corporation, through its diversif ied holdings and capital allocation and dividend policies, can allocate resources to ensure that all f inancial commitments made are met. Where necessary, the Corporation can borrow funds from the GRF, adjust dividend rates, obtain or mak e grants, or be provided with or provide equity injections to manage liquidity issues. The following summarizes the contractual matur ities of the Corporation’s f inancial liabilities at March 31, 2020 (thousands of dollars):

Carrying 0-6 7-12 1-2 3-5 More than

Amount Total Months Months Years Years 5 Years

Long-term debt1 $ 8,892,633 $ 15,657,004 $ 318,333 $ 447,275 $ 367,598 $ 1,608,659 $ 12,915,139 Trade and other payables 892,964 892,964 891,813 208 677 266 - Derivative f inancial l iabilities2 105,373 143,583 141,955 4,799 (3,050) (121) - Other liabilities3 2,112,892 2,075,071 1,659,806 86,552 87,235 135,016 106,462 $ 12,003,862 $ 18,768,622 $ 3,011,907 $ 538,834 $ 452,460 $ 1,743,820 $ 13,021,601 The Corporation anticipates generating sufficient cash flows through operations or credit facilities to support these contractual cash flows. The following summarizes the contractual matur ities of the Corporation’s f inancial liabilities at March 31, 2019 (thousands of dollars):

Carrying 0-6 7-12 1-2 3-5 More than Amount Total Months Months Years Years 5 Years

Long-term debt1 $ 8,325,089 $ 14,950,527 $ 156,509 $ 234,573 $ 819,078 $ 1,477,564 $ 12,262,803 Trade and other payables 825,639 825,639 825,639 - - - - Derivative f inancial l iabilities2 153,498 178,846 146,333 3,577 14,729 14,207 - Other liabilities3 2,121,703 2,124,468 1,692,757 91,848 91,648 137,625 110,590 $ 11,425,929 $ 18,079,480 $ 2,821,238 $ 329,998 $ 925,455 $ 1,629,396 $ 12,373,393

1 Contractual cash f lows for long-term debt include principal and interest payments, but exclude sink ing fund installments. 2 The terms and conditions of certain derivative f inancial instrument contracts require the Corporation to provide collateral when

the fair value of the obligation pursuant to these contracts is in excess of credit limits granted. As at March 31, 2020 and March 31, 2019, the Corporation has provided no collateral for these contracts.

3 Other liabilities include: bank indebtedness, notes payable, provision for unpaid insurance claims (Note 19), amounts due to reinsurers (Note 18) and premium taxes payable (Note 18).



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88.. FFiinnaanncciiaall aanndd iinnssuurraannccee rriisskk mmaannaaggeemmeenntt (continued) IInnssuurraannccee rriisskk mmaannaaggeemmeenntt Insurance r isk ar ises with respect to the adequacy of the Corporation’s insurance premium rates and provision for unpaid claims (consisting of underwriting and actuar ial r isk s).

ff)) UUnnddeerrwwrriittiinngg rriisskk

The Corporation manages its insurance r isk through its underwriting and reinsurance strategies within an overall strategic planning process. Pr icing is based on assumptions with regard to past exper iences and trends. Exposures are managed by having documented underwriting limits and cr iter ia, product and geographic diversif ication and reinsurance. ii)) DDiivveerrssiiffiiccaattiioonn

The Corporation writes property, liability and motor r isk s over a twelve-month per iod. The most significant r isk s ar ise from weather-related events such as severe storms. The Corporation attempts to mitigate r isk by conducting business in a number of provinces across Canada and by offer ing different lines of insurance products. The concentration of insurance r isk by line of business and region is summarized below by reference to the provision for unpaid insurance claim liabilities (Note 19) (thousands of dollars):

Gross Reinsurance Recoverable Net

2020 2019 2020 2019 2020 2019 Automobile $ 310,702 $ 301,585 $ 9,607 $ 17,163 $ 301,095 $ 284,022 Property 171,089 176,913 13,747 22,567 157,342 154,346 Liability 81,488 87,371 925 2,439 80,563 84,932 Assumed 3,176 4,705 - - 3,176 4,705 Discount 40,987 22,338 2,456 2,157 38,531 20,181 Other 13,277 10,454 - - 13,277 10,854 $ 620,719 $ 603,366 $ 26,735 $ 44,326 $ 593,984 $ 559,040

Gross Reinsurance Recoverable Net

2020 2019 2020 2019 2020 2019

Sask atchewan $ 250,734 $ 260,832 $ 13,963 $ 28,131 $ 236,771 $ 232,701 Ontar io 166,009 165,225 9,776 13,045 156,233 152,180 Alberta 164,165 141,782 2,788 2,704 161,377 139,078 Manitoba 16,973 19,245 (47) (298) 17,020 19,543 Br itish Columbia 20,814 13,713 255 744 20,559 12,969 Mar itimes 2,024 2,569 - - 2,024 2,569

$ 620,719 $ 603,366 $ 26,735 $ 44,326 $ 593,984 $ 559,040


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The concentration of insurance r isk by region and line of business is summarized below by reference to gross premiums written (thousands of dollars): 2020 Personal Commercial Automobile Property Property Liability Total Sask atchewan $ 178,460 $ 302,202 $ 61,371 $ 39,484 $ 581,517 Ontar io 99,580 20,514 5,780 5,180 131,054 Alberta 98,668 64,529 15,086 10,896 189,179 Manitoba - 25,151 11,985 4,957 42,093 Br itish Columbia - 45,462 6,902 3,128 55,492

$ 376,708 $ 457,858 $ 101,124 $ 63,645 $ 999,335 2019 Personal Commercial Automobile Property Property Liability Total Sask atchewan $ 168,900 $ 284,815 $ 56,031 $ 38,538 $ 548,284 Ontar io 76,575 14,268 6,021 4,296 101,160 Alberta 101,780 59,175 15,177 10,647 186,779 Manitoba - 21,264 9,453 4,451 35,168 Br itish Columbia - 35,152 6,155 2,570 43,877

$ 347,255 $ 414,674 $ 92,837 $ 60,502 $ 915,268

iiii)) RReeiinnssuurraannccee

The Corporation seek s to reduce losses that may ar ise f rom catastrophes or other events that cause unfavourable underwriting results by reinsur ing certain levels of r isk with other insurers. While the Corporation utilizes reinsurance, it is still exposed to reinsurance r isk . Reinsurance r isk is the r isk of f inancial loss due to inadequacies in reinsurance coverage or the default of a reinsurer . The Corporation evaluates and monitors the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvency. The policy of underwriting and reinsur ing insurance contracts limits the liability of the Corporation to a maximum amount for any one loss as follows (thousands of dollars):

2020 2019

Dwelling and farm property $ 1,500 $ 1,500 Unlicensed vehicles 1,500 1,500

Commercial property 1,500 1,500 Automobile and general l iability 1,500 1,500



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In addition, the Corporation carr ies property and auto physical damage catastrophe reinsurance limiting combined exposure to $17.5 million per event (2019 - $17.5 million) subject to an annual aggregate deductible of $17.5 million (2019 - $17.5 mil lion).

iiiiii)) SSttrruuccttuurreedd sseettttlleemmeennttss The Corporation settles some long-term disability claims by purchasing annuities from var ious

f inancial institutions. The settlements legally release the Corporation from its obligations to the claimants. Consequently, neither the annuities purchased nor the claim liabilities are recognized on the Consolidated Statement of Financial Position. However , as part of the settlement, the Corporation provides a f inancial guarantee to the claimants in the event the life insurers default on the scheduled payments and is thus exposed to credit r isk to the extent any of the life insurers fail to fulf ill their obligations. As at March 31, 2020, no information has come to the Corporation’s attention that would suggest any weak ness or fa ilure in the life insurers from which it has purchased annuities. The net present value of the scheduled payments at March 31, 2020 is $66.4 million (2019 - $63.5 million). The net r isk to the Corporation is the credit r isk related to the life insurance companies that the annuities are purchased from. No defaults have occurred and the Corporation considers the possibility of default to be remote.

gg)) AAccttuuaarriiaall rriisskk

The establishment of the provision for unpaid insurance claims (Note 19) is based on k nown facts and an interpretation of circumstances and is therefore a complex process influenced by a var iety of factors. Measurement of the provision is uncertain due to claims that are not reported to the Corporation at year-end and therefore estimates are made as to the value of these claims. As well, uncertainty exists regarding the cost of reported claims that have not been settled, as all the necessary information may not be available at year-end. The significant assumptions used to estimate the provision include: the Corporation’s exper ience with similar cases, histor ical claim payment trends and claim development patterns, the character istics of each class of business, claim sever ity and claim frequency, the effect of inflation on future claim settlement costs, court decisions and economic conditions. Time is also a cr itical factor in determining the provision, since the longer it tak es to settle and pay a claim, the more var iable the ultimate settlement amount will be. Accordingly, short-term claims such as physical damage or collision claims tend to be more reasonably predictable than long-term claims such as liability claims. As a result, the establishment of the provision for unpaid claims relies on a number of factors, which necessar ily involves r isk that the actual results may dif fer mater ially from the estimates.


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88.. FFiinnaanncciiaall aanndd iinnssuurraannccee rriisskk mmaannaaggeemmeenntt (continued) The following summarizes the Corporation’s sensitivity to changes in best estimate assumptions on the provision for unpaid claims and net earnings (thousands of dollars): Change to Net Provision for Unpaid Claims Change to Net Earnings Assumption Sensitivity 2020 2019 2020 2019 Discount rate 1.0 per cent increase $ (16,144) $ (14,651) $ (3,455) $ (3,102) Discount rate 1.0 per cent decrease 16,144 14,651 3,455 3,102 The net provision for unpaid insurance claims refers to the provision for unpaid insurance claims net of unpaid insurance claims recoverable from reinsurers. The method used for der iving this sensitivity information did not change from the pr ior per iod.

99.. IInnvveennttoorriieess (thousands of dollars) 2020 2019 Raw materials $ 221,538 $ 226,277 Natural gas in storage held-for-resale 18,795 30,295 Finished goods 14,910 19,508 Work -in-progress 611 915 $ 255,854 $ 276,995

For the year ended March 31, 2020, $446.9 million (2019 - $569.7 million) of natural gas in storage held-for-resale, and $464.7 million (2019 - $496.6 million) of raw mater ials inventory and other inventory were consumed. The Corporation recognized a $3.8 million recovery of natural gas in storage held-for-resale, raw mater ials and other inventory (2019 - $16.0 million).

1100.. DDiissccoonnttiinnuueedd ooppeerraattiioonnss aanndd aasssseettss hheelldd--ffoorr--ssaallee

On March 22, 2017, the Government of Sask atchewan announced that operating and capital subsidies to STC, the Corporation’s passenger and freight transportation segment, would cease in the upcoming fiscal year resulting in the wind up of the segment. Passenger and freight vehicular operations ceased May 31, 2017. The Corporation entered into an agreement for the sale of the remaining asset that closed April 30, 2019 with proceeds of $2.1 million. Depreciation of the asset ceased effective May 31, 2017. The carrying amount of the asset approximates fair value. Pr ior per iod earnings from the Corporation’s passenger and freight transportation segment have been classif ied as discontinued operations on the Consolidated Statement of Comprehensive Income. On March 31, 2019, STC was dissolved.



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1100.. DDiissccoonnttiinnuueedd ooppeerraattiioonnss aanndd aasssseettss hheelldd--ffoorr--ssaallee (continued)

Assets classif ied as held-for-sale are comprised of the following (thousands of dollars):

2020 2019 Property, plant and equipment $ - $ 2,090

The impact of discontinued operations on net earnings was comprised of the following (thousands of dollars):

2020 2019

Operating expenses $ - $ 313 Salaries, wages and short-term employee benefits - (218) Sask atchewan taxes and fees - 60 Results from operating activities - (155) Finance income - 117 Loss from discontinued operations $ - $ (38) The impact of discontinued operations on cash flows was comprised of the following (thousands of dollars):

2020 2019 Net cash from operating activities $ - $ 2,262 Net change in cash and cash equivalents $ - $ 2,262


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1111.. CCoonnttrraacctt aasssseettss aanndd ccoossttss (thousands of dollars)

CCoonnttrraacctt aasssseettss 2020 2019 Contract assets, beginning of year $ 78,167 $ 78,843 Contract assets recognized in the current year 88,767 78,768 Amortization of contract assets (76,665) (71,462) Contract terminations transferred to trade receivables (5,855) (7,046) Other (525) (936) Contract assets, end of year $ 83,889 $ 78,167 Current (61,548) (57,289) Non-current $ 22,341 $ 20,878 CCoonnttrraacctt ccoossttss 2020 2019 Contract costs, beginning of year $ 59,617 $ 53,978 Contract costs recognized in the current year 34,269 23,683 Amortization of contract costs (18,067) (17,160) Terminations (735) (884) Contract costs, end of year $ 75,084 $ 59,617 Current (16,735) (15,019) Non-current $ 58,349 $ 44,598



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1122.. IInnvveessttmmeennttss iinn eeqquuiittyy aaccccoouunntteedd iinnvveesstteeeess (thousands of dollars)

AAssssoocciiaatteess aanndd JJooiinntt VVeennttuurreess Ownership Interest Carrying Value Principal Place of Reporting 2020 2019 2020 2019 Business Date ISC (a) Canada December 31 31.0% 31.0% $ 73,238 $ 84,088 MRM Cogeneration Station (b) Canada December 31 -% 30.0% - 39,304 Sask atchewan Entrepreneurial Fund Joint V enture Canada December 31 45.5% 45.5% 174 242 $ 73,412 $ 123,634

2020 2019 Current assets $ 40,480 $ 60,478 Non-current assets 164,719 339,203 Current liabilities (20,811) (44,140) Non-current liabilities (31,448) (65,221) Net assets 152,940 290,320 Interest owned by other entities (79,528) (166,686) Share of net assets $ 73,412 $ 123,634 2020 2019 Revenue $ 181,632 $ 210,377 Expenses (165,488) (181,633) Net earnings 16,144 28,744 Other comprehensive income (loss) 478 (533) Total comprehensive income 16,622 28,211 Interest owned by other entities (11,370) (19,551) Share of results $ 5,252 $ 8,660

a) The Corporation is associated with ISC, which provides registry and information services in Sask atchewan.

The fair value of ISC shares was $78.4 million at March 31, 2020 (2019- $88.2 million). The shares are publicly traded under the Toronto Stock Exchange under the symbol ISV .

b) The MRM Cogeneration Station is a 172 MW natural gas-fired cogeneration facility located at the Athabasca

Oil Sands Project’s Musk eg River Mine, north of Fort McMurray, Alberta. The Corporation sold its 30.0 per cent ownership interest in the MRM Cogeneration Station with an effective date of December 31, 2019. Net proceeds from sale were $39.0 million and the Corporation recognized a gain of $1.0 million.


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1133.. PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt (thousands of dollars)

Machinery Buildings Land, Coal and and Plant Under Properties Finance Equipment Improvements Construction and Rights Leases Total Cost Balance at April 1, 2018 $ 19,387,093 $ 2,194,671 $ 1,146,297 $ 288,751 $ 1,276,359 $ 24,293,171 Additions 1,208,572 125,134 1,303,388 8,249 15,888 2,661,231 Disposals (313,319) (2,103) (1,219) (585) (5,845) (323,071) Transfers from plant under construction - - (1,174,151) - - (1,174,151) Balance at

March 31, 2019 $ 20,282,346 $ 2,317,702 $ 1,274,315 $ 296,415 $ 1,286,402 $ 25,457,180 Additions 1,906,995 226,052 1,178,900 32,456 - 3,344,403 Disposals (188,658) (6,715) (11,510) (2,396) - (209,279) IFRS 16 adjustments 20,627 - - - (1,286,402) (1,265,775) Transfers from plant under construction - - (1,903,719) - - (1,903,719) Balance at

March 31, 2020 $ 22,021,310 $ 2,537,039 $ 537,986 $ 326,475 $ - $ 25,422,810 Accumulated Depreciation Balance at April 1, 2018 (Restated – Note 36) $ 8,739,773 $ 787,952 $ - $ 39,956 $ 468,617 $ 10,036,298 Depreciation expense 693,242 56,768 - (2,619) 58,490 805,881 Disposals (275,355) (6,204) - (360) (951) (282,870) Impairment recover ies (11,506) - - - - (11,506) Balance at March 31, 2019 $ 9,146,154 $ 838,516 $ - $ 36,977 $ 526,156 $ 10,547,803 Depreciation expense 717,633 62,454 - 3,043 - 783,130 Disposals (162,460) (3,993) - (1,471) - (167,924) Impairment losses 193 - - - - 193 IFRS 16 adjustments 92 - - - (526,156) (526,064) Balance at March 31, 2020 $ 9,701,612 $ 896,977 $ - $ 38,549 $ - $ 10,637,138

Carrying Amounts

At March 31, 2019 $ 11,136,192 $ 1,479,186 $ 1,274,315 $ 259,438 $ 760,246 $ 14,909,377 At March 31, 2020 $ 12,319,698 $ 1,640,062 $ 537,986 $ 287,926 $ - $ 14,785,672



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1144.. RRiigghhtt--ooff--uussee aasssseettss (thousands of dollars)

Machinery Buildings Land, Coal, Power and and Properties Purchase Equipment Improvements and Rights Agreements Total

Cost Balance at April 1, 2019 $ - $ - $ - $ - $ - IFRS 16 adjustment 24,825 66,917 16,936 1,243,283 1,351,961 Additions 7,144 7,637 307 2,035 17,123 Disposals and retirements (571) (190) (1,115) (228,210) (230,086) Balance at March 31, 2020 $ 31,398 $ 74,364 $ 16,128 $ 1,017,108 $ 1,138,998

Accumulated Depreciation Balance at April 1, 2019 $ - $ - $ - $ - $ - IFRS 16 adjustment 3,195 3,518 - 519,377 526,090 Depreciation expense 6,215 11,190 1,370 51,734 70,509 Disposals and retirements (488) (123) - (152,140) (152,751) Balance at March 31, 2020 $ 8,922 $ 14,585 $ 1,370 $ 418,971 $ 443,848

Carrying Amounts

At March 31, 2019 $ - $ - $ - $ - $ - At March 31, 2020 $ 22,476 $ 59,779 $ 14,758 $ 598,137 $ 695,150


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1155.. IInnvveessttmmeenntt pprrooppeerrttyy (thousands of dollars) Property Leasehold Under Buildings Infrastructure Improvements Construction Total

Cost Balance at April 1, 2018 $ 183,306 $ 62,775 $ 13,993 $ 24,015 $ 284,089

Additions 6,409 1,201 21,942 - 29,552 Transfers from property under construction - - - (21,235) (21,235) Balance at March 31, 2019 $ 189,715 $ 63,976 $ 35,935 $ 2,780 $ 292,406

Additions 3,364 10 1,003 - 4,377 Transfers from property under construction - - - (521) (521) Balance at March 31, 2020 $ 193,079 $ 63,986 $ 36,938 $ 2,259 $ 296,262 Accumulated Depreciation Balance at April 1, 2018 $ 74,553 $ 23,120 $ 11,067 $ 712 $ 109,452

Depreciation expense 5,206 1,724 1,988 - 8,918 Impairment losses - - - 13 13 Balance at March 31, 2019 $ 79,759 $ 24,844 $ 13,055 $ 725 $ 118,383

Depreciation expense 4,948 1,749 1,942 - 8,639 Balance at March 31, 2020 $ 84,707 $ 26,593 $ 14,997 $ 725 $ 127,022

Carrying Amounts

At March 31, 2019 $ 109,956 $ 39,132 $ 22,880 $ 2,055 $ 174,023 At March 31, 2020 $ 108,372 $ 37,393 $ 21,941 $ 1,534 $ 169,240

The estimated mark et value of investment property at March 31, 2020 was $271.0 million (2019 - $280.7 million). The mark et value is based on internally-generated estimates of cash flows of individual properties using capitalization rates in the range of 6.3 per cent to 10.0 per cent (2019 - 6.3 per cent to 10.0 per cent), applied based on property type and mark et character istics, which resulted in an overall weighted average capitalization rate of 7.2 per cent (2019 - 7.2 per cent).

The mark et estimate is considered level 3 within the fa ir value hierarchy (Note 8(a)) as the major ity of inputs are not based on observable mark et data. AAmmoouunnttss rreeccooggnniizzeedd wwiitthhiinn eeaarrnniinnggss 2020 2019

Rental income from investment properties $ 37,975 $ 39,596 Direct operating expenses from property that generated rental income dur ing the year (34,265) (35,901) $ 3,710 $ 3,695



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1166.. IInnttaannggiibbllee aasssseettss (thousands of dollars)

Software and Development Customer Indefinite Goodwill (a) Costs (a) Accounts Life (b) Other Total Cost

Balance at April 1, 2018 $ 5,976 $ 836,911 $ - $ 108,738 $ 1,500 $ 953,125 Acquisitions - internally developed - 8,283 - - - 8,283 Disposals - (29,953) - - - (29,953) Acquisitions - other - 53,526 - - - 53,526

Balance at March 31, 2019 $ 5,976 $ 868,767 $ - $ 108,738 $ 1,500 $ 984,981 Acquisitions - internally developed - 7,995 - - - 7,995 Disposals - (470) - - (1,500) (1,970) Acquisitions - other - 63,089 - 12,167 - 75,256

Balance at March 31, 2020 $ 5,976 $ 939,381 $ - $ 120,905 $ - $ 1,066,262 Accumulated Amortization Balance at April 1, 2018 $ - $ 538,706 $ - $ - $ 1,500 $ 540,206

Amortization expense - 66,407 - - - 66,407 Disposals - (29,830) - - - (29,830)

Balance at March 31, 2019 $ - $ 575,283 $ - $ - $ 1,500 $ 576,783 Amortization expense - 65,329 - - - 65,329 Disposals - (283) - - (1,500) (1,783) Impairment losses 5,976 4,684 - - - 10,660

Balance at March 31, 2020 $ 5,976 $ 645,013 $ - $ - $ - $ 650,989

Carrying Amounts At March 31, 2019 $ 5,976 $ 293,484 $ - $ 108,738 $ - $ 408,198 At March 31, 2020 $ - $ 294,368 $ - $ 120,905 $ - $ 415,273

a) For the purpose of impairment testing on goodwill and software and development costs, the

Corporation applied the value-in-use valuation methodology for the CGU as well as terminal value capitalization. The expected r isk to the CGU cash flows were included in the cash flow projections. The resulting cash flows were then discounted to the present value using the weighted average cost of capital applicable to the CGU. The k ey mater ial assumptions are discount rate, terminal value capitalization rate, and growth rate. The impairment test resulted in the recognition of an impairment loss of $10.7 million dur ing the year ended March 31, 2020.


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1166.. IInnttaannggiibbllee aasssseettss (continued) b) For the purpose of impairment testing, indefinite-life intangible assets (spectrum licenses) are allocated

to Sask Tel. This is the lowest level within the Corporation at which indefinite-life intangible assets are monitored for internal management purposes, which is not higher than the Corporation’s operating segments. The Corporation’s CGU impairment tests were based on fair value less costs to sell using comparable companies that are listed on exchanges and are actively traded. Share pr ices for these companies were used to der ive an Enterpr ise V alue (EV ) to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio that was applied to the EBITDA of the unit to determine the recoverable amount. The Corporation applied an industry average EV to EBITDA ratio for minority discounts associated with publicly traded shares to the EBITDA of the unit to estimate the recoverable amount of the unit. The impairment test indicated no impairment at March 31, 2020 or March 31, 2019.

1177.. NNootteess ppaayyaabbllee

Notes payable are due to the GRF. These notes are due on demand and have an effective interest rate of 1.6 per cent (2019 - 1.9 per cent).

1188.. DDeeffeerrrreedd rreevveennuuee (thousands of dollars) 2020 2019 Unearned insurance premiums $ 480,153 $ 444,117 Services billed in advance 35 33 Premium taxes payable 8,258 8,233 Amounts due to reinsurers 34,342 33,492 Other 22,837 23,484 $ 545,625 $ 509,359

1199.. PPrroovviissiioonnss

(thousands of dollars)

Unpaid Insurance Decommissioning Environmental Claims Provisions Remediation (c) and Other (a) (b) Note 8(f) Provisions Total Balance at April 1, 2019 $ 421,343 $ 128,080 $ 603,366 $ 651 $ 1,153,440 Provision for decommissioning

and environmental remediation liabilities 1,843 76 - - 1,919

Other provisions made 125,477 - 550,050 - 675,527 Provisions used (17,259) (1,160) (532,697) (185) (551,301)

Provisions reversed - - - (71) (71) Accretion expense 10,505 - - 39 10,544 Balance at March 31, 2020 $ 541,909 $ 126,996 $ 620,719 $ 434 $ 1,290,058

Current - - (267,134) (169) (267,303) Non-current $ 541,909 $ 126,996 $ 353,585 $ 265 $ 1,022,755



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1199.. PPrroovviissiioonnss (continued) (thousands of dollars)

Insurance Decommissioning Environmental Claims Provisions Remediation (c) and Other (a) (b) Note 8(f) Provisions Total Balance at April 1, 2018 $ 321,712 $ 92,534 $ 543,421 $ 808 $ 958,475 Provision for decommissioning

and environmental remediation liabilities 5,266 30,754 - - 36,020

Other provisions made 104,030 600 537,263 - 641,893 Provisions used (19,232) (2,738) (477,318) (192) (499,480)

Provisions reversed - - - (16) (16) Accretion expense 9,567 6,930 - 51 16,548 Balance at March 31, 2019 $ 421,343 $ 128,080 $ 603,366 $ 651 $ 1,153,440

Current - - (263,503) (190) (263,693) Non-current $ 421,343 $ 128,080 $ 339,863 $ 461 $ 889,747

aa)) DDeeccoommmmiissssiioonniinngg pprroovviissiioonnss

The Corporation has estimated the future cost of decommissioning certain electr ical and natural gas facilities. For the purposes of estimating the fair value of these obligations, it is assumed that these costs will be incurred between 2021 and 2111 for natural gas facilities and 2021 and 2071 for electr ical facilities. The undiscounted cash flows required to settle the obligations total $953.8 million (2019 - $875.7 million). Risk -free rates between 1.7 per cent and 2.8 per cent were used to calculate the discounted carrying value of the obligation. During the year , the Corporation recorded an additional $1.8 million provision (2019 - $5.3 million) to settle this liability. No funds have been set aside by the Corporation to settle this liability.

The following summarizes the Corporation’s sensitivity to changes in best estimate assumptions on the March 31, 2020 decommissioning provision (thousands of dollars):

Undiscounted Discounted Discount rate Inflation rate cash flows cash flows + 0. 5% - 0. 5% + 0. 5% - 0. 5% Decommissioning $ 953,809 $ 541,909 $ (65,726) $ 92,983 $ 71,289 $ (91,418)

bb)) EEnnvviirroonnmmeennttaall rreemmeeddiiaattiioonn The following are included in the provision for environmental remediation: i) The Corporation is committed to undertak e necessary environmental clean-up activities on certain

properties. The Corporation has accrued $59.5 million (2019 - $59.5 million) to car ry out clean-up activities and associated costs related to an indemnity provided by Pr ince Albert Pulp Company Ltd. (PAPCO) and Her Majesty in Right of the Province of Sask atchewan for environmental liabilities predating 1986 related to the Pr ince Albert pulp mill site and the ERCO Worldwide chemical plant in Sask atoon. The Corporation is a successor corporation to PAPCO and therefore has recorded the estimated cost of its assumed obligations related to the PAPCO site. The timing to complete this remediation is indeterminable at this time.


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1199.. PPrroovviissiioonnss (continued)

i i) The Corporation has accrued $67.5 million (2019 - $68.6 million) related to estimated environmental remediation for its electr ical generation assets and other properties.

cc)) UUnnppaaiidd iinnssuurraannccee ccllaaiimmss

The provision for unpaid insurance claims has been calculated using a discount rate of 1.6 per cent (2019 - 2.1 per cent).

2200.. LLeeaassee lliiaabbiilliittiieess (thousands of dollars)

2020 2019 Contractual undiscounted cash f lows $ 2,442,428 $ 2,671,977 Less: future f inance charges on leases (1,354,976) (1,551,619) Discounted lease liabilities 1,087,452 1,120,358 Less: current portion of discounted lease liabilities (44,444) (27,490)

Non-current discounted lease liabilities $ 1,043,008 $ 1,092,868

During the year ended March 31, 2020, the Corporation recognized $157.4 million of interest costs in the Consolidated Statement of Comprehensive Income related to these lease liabilities. As at March 31, 2020, scheduled contractual undiscounted cash flows and discounted lease liabilities are as follows:

More than 1 year 1-5 years 5 years

Maturity analysis – contractual undiscounted cash flows $ 193,090 $ 763,858 $ 1,485,480 Discounted lease liabilities 44,444 223,521 819,487



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2211.. LLoonngg--tteerrmm ddeebbtt (thousands of dollars)

2020 2019

Effective Ef fective Principal Interest Pr incipal Interest

Outstanding Rate Outstanding Rate

General Revenue Fund (years to maturity)

1-5 years $ 1,091,689 8.1% $ 984,281 8.7% 6-10 years 633,259 5.2% 608,259 5.5%

11-15 years 669,000 6.0% 669,000 6.0% 16-20 years 780,612 4.8% 725,019 4.9% 21-25 years 1,440,318 4.0% 1,453,318 4.0% 26-30 years 2,875,000 3.4% 2,875,000 3.4% Beyond 30 years 1,350,000 3.2% 935,000 3.3%

Total due to the GRF 8,839,878 4.5% 8,249,877 4.6%

Other long-term debt (due 2021 to 2050) 7,826 8.9% 67,398 6.1% Unamortized debt premium net of issue costs 44,929 7,814

8,892,633 8,325,089 Due within one year (441,246) (69,135) Total long-term debt $ 8,451,387 $ 8,255,954

Principal repayments due in each of the next f ive years are as follows:

2021 $ 441,246 2022 244,405 2023 256,741 2024 2,100 2025 150,069

There is a requirement attached to certain interest-bear ing issues from the GRF to mak e annual payments

into sink ing funds in amounts representing a minimum of 1.0 per cent of the or iginal issue. The cumulative annual payments plus interest earned are used for the retirement of debt issues, upon matur ity, with the GRF.


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2222.. CCoonnttrraacctt lliiaabbiilliittiieess (thousands of dollars) 2020 2019 Contract liabilities, beginning of year $ 277,969 $ 310,899 Contract liabilities recognized in the current year 384,709 389,255 Recognized in revenue (382,168) (408,221) Terminations (7,016) (9,618) Other (3,622) (4,346) Contract costs, end of year $ 269,872 $ 277,969 Current (99,922) (104,090) Non-current $ 169,950 $ 173,879

2233.. EEmmppllooyyeeee ffuuttuurree bbeenneeffiittss

DDeeffiinneedd bbeenneeffiitt ppeennssiioonn ppllaannss The Corporation has three defined benefit pension plans, for certain of its employees, that have been closed to new membership. Annual audited financial statements for each plan are prepared and released publicly. The actuar ial valuations include a provision for uncommitted and ad hoc benefit increases; and are measured using management’s best estimates based on assumptions that reflect the most probable set of economic circumstances and planned courses of action. There is a r isk that the actual amount may differ mater ially from the estimate. The major assumptions used in the valuation of the defined benefit pension plans are as follows:

2020

SaskTel SGI CANADA SaskPower

Discount rate - end of year 3.7% 3.6% 3.7% Inflation rate 2.3% 2.0% 2.0% Duration (years) 11 10 11 Post-retirement index 1.6% 0.0% 70.0% of CPI Last actuarial valuation 3/31/17 12/31/16 9/30/17

2019

Sask Tel SGI CANADA Sask Power

Discount rate - end of year 3.2% 3.1% 3.2% Inf lation rate 2.3% 2.0% 2.0% Duration (years) 11 9 11 Post-retirement index 1.6% 0.0% 70.0% of CPI Last actuarial valuation 3/31/17 12/31/16 9/30/17

Mortality rates were applied utilizing the Canadian Pensioner 2014 Pr ivate Sector Mortality Table with 95.0 - 100.0 per cent scaling factor for males, 100.0 - 110.0 per cent scaling factor for females and projected generationally with Canadian Pensioners’ Mortality Improvement Scale B .



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2233.. EEmmppllooyyeeee ffuuttuurree bbeenneeffiittss (continued)

The actuar ial assumptions are based on management’ s expectations, independent actuar ial advice and guidance provided by IFRS. The most significant assumption for each plan is the discount rate, which is the yield at the reporting date of high-quality debt instruments that have matur ity dates approximating the terms of the plan obligations. Sensitivity analysis on defined benefit pension plan assumptions

The following illustrates the impact on the March 31, 2020 defined benefit pension obligation from a change in an actuar ial assumption while holding all other assumptions constant (thousands of dollars):

SaskTel SGI CANADA SaskPower Increase Decrease Increase Decrease Increase Decrease Discount rate (1.0 per cent) $ (89,843) $ 106,999 $ (2,351) $ 2,790 $ (84,360) $ 100,266 Inf lation rate (1.0 per cent) (44,471) (120) N/A1 N/A1 (30,662) 32,570 Post-retirement index (1.0 per cent) 43,611 2 (96,756) 471 N/A1 92,972 (79,677) Mortality (1 year) N/A1 N/A1 N/A1 N/A1 (28,590) 29,846

1Impact to the March 31, 2020 defined benefit pension obligation from a change in assumption is not considered signif icant. 2Amount ref lects a 0.4 per cent increase to the post-retirement index as this is the maximum increase allowed under the Plan.


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Information about the Corporation’s defined benefit pension plans is as follows (thousands of dollars):

2020 SaskTel SGI CANADA SaskPower Total

Defined benefit pension plan obligation, beginning of year $ 1,028,899 $ 29,003 $ 890,294 $ 1,948,196 Included in net earnings: Current service cost 399 1 - 400 Interest cost 31,788 928 26,636 59,352 32,187 929 26,636 59,752 Included in OCI: Actuarial gains arising from: Financial assumptions (51,109) (1,414) (46,043) (98,566) Benefits paid (65,944) (3,602) (61,526) (131,072) Defined benefit pension plan obligation, end of year $ 944,033 $ 24,916 $ 809,361 $ 1,778,310

Fair value of defined benefit pension plan assets, beginning of year $ 1,028,899 $ 29,003 $ 720,159 $ 1,778,061 Included in net earnings: Interest income 31,935 876 21,192 54,003 Included in OCI: Return on plan assets excluding interest income (32,234) (692) (34,419) (67,345) Asset ceiling adjustment (18,623) (670) - (19,293) (50,857) (1,362) (34,419) (86,638)

Employee funding contr ibutions - 1 - 1 Benefits paid (65,944) (3,602) (61,526) (131,072) (65,944) (3,601) (61,526) (131,071) Fair value of defined benefit pension plan assets, end of year $ 944,033 $ 24,916 $ 645,406 $ 1,614,355 Funded status - plan deficit and net defined benefit pension obligation $ - $ - $ 163,955 $ 163,955



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2019 Sask Tel SGI CANADA Sask Power Total

Defined benefit pension plan obligation, beginning of year $ 1,038,737 $ 29,630 $ 901,814 $ 1,970,181 Included in net earnings: Current service cost 356 1 - 357 Interest cost 34,110 962 31,224 66,296 34,466 963 31,224 66,653 Included in OCI: Actuarial losses ar ising from: Financial assumptions 22,218 806 18,978 42,002 Benefits paid (66,522) (2,396) (61,722) (130,640) Defined benefit pension plan obligation, end of year $ 1,028,899 $ 29,003 $ 890,294 $ 1,948,196

Fair value of defined benefit pension plan assets, beginning of year $ 1,038,737 $ 30,875 $ 739,999 $ 1,809,611 Included in net earnings: Interest income 34,350 930 25,722 61,002 Included in OCI: Return on plan assets excluding interest income 19,914 821 16,160 36,895 Asset ceiling adjustment 2,420 (1,228) - 1,192 22,334 (407) 16,160 38,087

Employee funding contr ibutions - 1 - 1 Benefits paid (66,522) (2,396) (61,722) (130,640) (66,522) (2,395) (61,722) (130,639) Fair value of defined benefit pension plan assets, end of year $ 1,028,899 $ 29,003 $ 720,159 $ 1,778,061 Funded status - plan deficit and net def ined benefit pension obligation $ - $ - $ (170,135) $ (170,135)


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The asset allocation of the defined benefit pension plans are as follows:

2020 SaskTel SGI CANADA SaskPower

Asset category Short-term investments 1.4% 2.0% 0.0% Bond and debentures 45.0% 69.0% 40.3% Equity secur ities - Canadian 9.7% 11.0% 0.0% Equity secur ities - US 10.9% 9.0% 0.0% Equity secur ities - Non-North American 15.7% 9.0% 50.5% Real estate 17.4% 0.0% 9.2%

2019 Sask Tel SGI CANADA Sask Power

Asset category Short-term investments 0.9% 4.0% 0.5% Bond and debentures 43.6% 66.0% 34.5% Equity secur ities - Canadian 10.9% 12.0% 5.7% Equity secur ities - US 10.9% 9.0% 0.0% Equity secur ities - Non-North American 16.9% 9.0% 41.8% Real estate 16.8% 0.0% 17.5%

OOtthheerr ddeeffiinneedd bbeenneeffiitt ppllaannss Other benefit plans include a defined benefit and a def ined contr ibution severance plan, a supplementary superannuation plan, two defined benefit service recognition plans, a defined benefit retir ing allowance plan and a voluntary ear ly retirement plan. All other defined benefit plans are unfunded.



97

2233.. EEmmppllooyyeeee ffuuttuurree bbeenneeffiittss (continued) Information about the Corporation’s other defined benefit plans is as follows (thousands of dollars):

2020 SaskTel SGI CANADA S SaskPower SaskEnergy SaskWater Total

Other defined benefit plan obligation, beginning of year $ 14,475 $ 15,536 $ 44,250 $ 4,986 $ 548 $ 79,795 Included in net earnings: Current service cost - 170 5,604 23 37 5,834 Interest cost 411 475 4,945 147 18 5,996 411 645 10,549 170 55 11,830 Included in OCI: Actuarial (gain) loss ar ising from: Financial assumptions (487) - 431 66 23 33 Exper ience adjustments 26 (588) - (63) (27) (652) (461) (588) 431 3 (4) (619) Benefits paid (1,512) (2,054) (9,295) (450) - (13,311) Other defined benefit plan obligation, end of year $ 12,913 $ 13,539 $ 45,935 $ 4,709 $ 599 $ 77,695

2019 Sask Tel SGI CANADA Sask Power Sask Energy Sask Water Total

Other defined benefit plan obligation, beginning of year $ 16,118 $ 16,740 $ 48,501 $ 6,135 $ 524 $ 88,018 Included in net earnings: Current service cost - 101 7,451 22 38 7,612 Interest cost 483 556 465 272 16 1,792 483 657 7,916 294 54 9,404 Included in OCI: Actuarial (gain) loss ar ising from: Financial assumptions (147) - (232) (38) (9) (426) Experience adjustments 98 (173) - (91) (1) (167) (49) (173) (232) (129) (10) (593) Benefits paid (2,077) (1,688) (11,935) (1,314) (20) (17,034) Other defined benefit plan obligation, end of year $ 14,475 $ 15,536 $ 44,250 $ 4,986 $ 548 $ 79,795


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The significant actuar ial assumptions used in the valuation of other defined benefit plans are as follows: 2020

SaskTel SGI CANADA SaskPower SaskEnergy SaskWater

Discount rate 3.4% 3.6% 2.8-2.9% 2.3% 2.6% Inf lation rate 0.0% 2.0% 2.0% 1.7% 2.3% Long-term rate of compensation increases 2.0% 3.0% 2.0% 3.0% 2.8% Remaining service life (years) 8 10-12 7 3 12 Last actuarial valuation 3/31/19 12/31/16 9/30/17 12/31/19 12/31/19 2019

Sask Tel SGI CANADA Sask Power Sask Energy Sask Water Discount rate 3.0% 3.1% 2.9-3.6% 2.8% 3.1% Inf lation rate 0.0% 2.0% 2.0% 1.7% 2.3% Long-term rate of compensation increases 2.0% 2.3-3.7% 2.0% 3.0% 2.8% Remaining service life (years) 8 11-12 7 4 12

Last actuarial valuation 3/31/19 12/31/16 9/30/17 12/31/18 12/31/18

The actuar ial assumptions are based on management’ s expectations, independent actuar ial advice and guidance provided by IFRS. The most significant assumption for each plan is the discount rate, which is the yield at the reporting date of high-quality debt instruments that have matur ity dates approximating the terms of the plan obligations.

A 1.0 per cent change in the actuar ial assumptions would not have a mater ial effect on the March 31, 2020 other defined benefit obligation. EEmmppllooyyeeee ffuuttuurree bbeenneeffiitt lliiaabbiilliittyy

The employee future benefit liability on the Consolidated Statement of Financial Position represents the funded status of the Corporation’s defined benefit pension plans and other defined benefit plans. On a combined basis, at March 31, 2020, these liabilities totaled $241.7 million (2019 - $249.9 million). DDeeffiinneedd ccoonnttrriibbuuttiioonn ppeennssiioonn ppllaannss The Corporation also has employees who are members of defined contr ibution pension plans. The Corporation’s f inancial obligation is limited to contractual contr ibutions to the plan. On a combined basis, the Corporation paid $63.7 million (2019 - $61.2 million) into these plans.

EEmmppllooyyeeee ffuuttuurree bbeenneeffiittss eexxppeennssee

Employee future benefits expense on the Consolidated Statement of Comprehensive Income includes contr ibutions to the defined contr ibution pension plans and current service costs for the defined benefit pension plans and other defined benefit plans. On a combined basis, employee future benefits expense totaled $69.9 million (2019 - $69.2 million).



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2244.. OOtthheerr lliiaabbiilliittiieess (thousands of dollars) 2020 2019

Government grants $ 36,741 $ 35,336 Future income tax liabilities and other (943) 652 $ 35,798 $ 35,988

2255.. EEqquuiittyy aaddvvaanncceess aanndd ccaappiittaall ddiisscclloossuurreess

The Corporation does not have share capital. However , the Corporation has received advances from the GRF to form its equity capitalization. The advances are an equity investment in the Corporation by the GRF.

Due to its ownership structure, the Corporation has no access to capital mark ets for equity. Equity advances in the Corporation are determined by the shareholder on an annual basis. Dividends and equity repayments to the GRF are determined through the Sask atchewan provincial budget process on an annual basis.

The Corporation closely monitors its debt level utilizing the debt ratio as a pr imary indicator of f inancial health. The debt ratio measures the amount of debt in the Corporation’s capital structure. The Corporation uses this measure in assessing the extent of f inancial leverage and, in turn, its f inancial f lexibility. Too high a ratio relative to target indicates an excessive debt burden that may impair the Corporation’s ability to withstand downturns in revenues and still meet f ixed payment obligations. The ratio is calculated as net debt divided by capitalization at the end of the year .

CIC reviews the debt ratio targets of all its subsidiary Crown corporations on an annual basis to ensure consistency with industry standards. This review includes subsidiary Crown corporations’ plans for capital spending. The target debt ratios for subsidiary Crown corporations are approved by the CIC Board. The Corporation uses targeted debt ratios to compile a weighted average debt ratio for the CIC Crown sector .

The Corporation raises most of its capital requirements through internal operating activities and notes payable and long-term debt through the GRF. This type of borrowing allows the Corporation to tak e advantage of the Province of Sask atchewan’s strong credit rating and receive financing at attractive interest rates. The Corporation made no changes to its approach to capital management dur ing the year and complied with all externally imposed capital requirements. The debt ratio is as follows (thousands of dollars): Note 2020 2019 (Restated – Note 36) Total debt (a) $ 10,342,206 $ 9,795,275 Less: Sink ing funds 7(a) (1,198,312) (1,064,831) Net debt 9,143,894 8,730,444 Equity 5,814,512 5,665,676 Capitalization $ 14,958,406 $ 14,396,120 Debt ratio 61.1% 60.6%

a) Total debt includes long-term debt, long-term debt due within one year and notes payable.


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2266.. AAccccuummuullaatteedd ootthheerr ccoommpprreehheennssiivvee iinnccoommee (thousands of dollars)

2020 2019 Items that may be subsequently reclassif ied to net earnings: Unrealized gains on sink ing funds $ 32,981 $ 8,677 Unrealized losses on cash f low hedges (13,346) (39,513) Realized losses on cash f low hedges (11,236) (11,695) 8,399 (42,531) Items that will not be reclassif ied to net earnings: Impact of changes in defined benefit plan actuarial assumptions 132,198 119,651 $ 140,597 $ 77,120

2277.. CCoommmmiittmmeennttss aanndd ccoonnttiinnggeenncciieess The following significant commitments and contingencies exist at March 31, 2020:

a) At 2020 pr ices, the Corporation has forward commitments of $1,287.2 million (2019 - $1,528.1 million)

extending until 2030 for future minimum coal deliver ies. b) As at March 31, 2020, the Corporation has committed to spend $1,249.8 million (2019 - $1,194.8 million)

on capital projects.

c) The Corporation has issued letters of credit in the amount of $20.4 million (2019 - $39.6 million). d) The Corporation has entered into contracts to purchase natural gas, transportation and storage

expected to cost $494.8 mil lion (2019 - $591.6 million) based on forward mark et pr ices until 2030. This includes f ixed pr ice forward contracts with a notional value of $484.1 million (2019 - $588.5 million) which apply for the own-use scope exception.

e) As at March 31, 2020, the Corporation has committed to transmission purchases of $7.2 million (2019 - $13.0 million).

f ) The Corporation has entered into PPAs that provide over 1,200 MW of generating capacity. The

payments related to these PPAs are expected to be $8,117.6 million (2019 - $8,047.3 million) until 2048, which includes leases of $2,332.0 million (2019 - $2,653.9 million).

g) Dur ing the year , the Corporation entered into commodity contracts for the physical purchase of natural

gas that qualify as own-use contracts. As at March 31, 2020, own-use natural gas der ivative instruments had the following notional values and matur ities for the next f ive f iscal years (millions of dollars):

2021 $ 74.4 2022 73.0 2023 70.8 2024 70.5 2025 85.5



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2277.. CCoommmmiittmmeennttss aanndd ccoonnttiinnggeenncciieess (continued) h) The Corporation has outstanding service contract commitments of $231.9 million

(2019 - $141.7 million). i) Subject to certain conditions, the Corporation has agreed to mak e annual payments of $2.6 million to

the Regina Exhibition Association until 2027 and $0.4 million to the Moose Jaw Exhibition Company Ltd. until 2028, as compensation for the loss of gaming income caused by the operation of Casino Regina and Casino Moose Jaw respectively.

j ) On August 9, 2004, a proceeding under The Class Actions Act (Sask atchewan) was brought against several

Canadian wireless and cellular service providers, including the Corporation. The Plaintiffs seek unquantif ied damages from the defendant wireless communications service providers. Similar proceedings have been filed by, or on behalf of, Plaintiffs’ counsel in other provincial jur isdictions. On September 17, 2007, the Sask atchewan court certi f ied the Plaintif f 's proceeding as a class action with respect to an allegation of unjust enr ichment only for wireless customers dur ing the per iod of Apr il 1, 1987 and the date of the certif ication order being February 13, 2008. The class action per iod has now been extended to March 31, 2014. The matter will now proceed in the usual fashion of f inalized pleadings, document and oral discovery to tr ial. The Corporation continues to believe that it has strong defenses to the allegations as certif ied in the 2004 action.

k ) The Corporation has var ious legal matters pending which, in the opinion of management, will not have a

mater ial effect on the Corporation’s consolidated financial position or results of operations. Should the ultimate resolution of actions differ from management’s assessments and assumptions, a mater ial adjustment to the Corporation’s f inancial position or results of operations could result.


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2288.. RReevveennuuee aanndd ootthheerr iinnccoommee (thousands of dollars)

2020 2019 Utilities1 $ 4,949,216 $ 5,007,222 Insurance 963,300 857,100 Entertainment 114,077 118,637 Investment and economic growth 40,450 41,140 Other and consolidation adjustments (136,886) (140,873)

$ 5,930,157 $ 5,883,226 1Utilities revenue pr imarily consists of revenue from contracts with customers. These contracts include wireless, internet, -television, telephone, electr icity, water , and natural gas contracts.

2299.. DDeepprreecciiaattiioonn aanndd aammoorrttiizzaattiioonn (thousands of dollars)

Note 2020 2019 Property, plant and equipment 13 $ 783,130 $ 805,881 Right-of-use assets 14 70,509 - Investment property 15 8,639 8,918 Intangible assets 16 65,329 66,407 $ 927,607 $ 881,206

3300.. IImmppaaiirrmmeenntt lloosssseess (thousands of dollars)

Note 2020 2019 Impairment losses on investments $ 11,816 $ 21,730 Impairment losses (reversals) on property, plant and equipment 13 193 (11,506) Impairment losses on investment property 15 - 13 Impairment losses on intangible assets 16 10,660 - $ 22,669 $ 10,237



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3311.. SSaasskkaattcchheewwaann ttaaxxeess aanndd ffeeeess (thousands of dollars) Note 2020 2019

Sask atchewan capital tax $ 81,168 $ 78,217 Grants in lieu of taxes to municipalities 39,855 38,666 Insurance premium tax 27,548 26,171 Gaming fees 20,080 22,460 Other 6,703 6,275 175,354 171,789 Discontinued operations 10 - (60) $ 175,354 $ 171,729

3322.. FFiinnaannccee iinnccoommee aanndd eexxppeennsseess (thousands of dollars)

Note 2020 2019

Recognized in consolidated net earnings Sink ing fund earnings 7(a) $ 33,256 $ 24,260

Gain on sale of investments at fair value through profit or loss 14,597 - Change in fair value of financial assets at fair value through prof it or loss (28,595) 17,668 Interest and other income from investments at fair value

through profit or loss 19,918 18,328 Interest and other income from investments at amortized cost 8,984 8,296

Interest income from defined benefit pension plans 23 54,003 61,002 Other 25,139 29,361 Finance income 127,302 158,915 Interest expense on f inancial l iabilities measured at amortized cost 584,009 568,216 Accretion expense on provisions 19 10,544 16,548 Interest cost on defined benefit pension plans 23 59,352 66,296 Interest cost on other defined benefit plans 23 5,996 1,792 Interest capitalized1 (33,292) (44,672) Other 1,683 3,382 Finance expenses 628,292 611,562 Net finance expenses $ 500,990 $ 452,647

Discontinued operations 10 - 117 $ 500,990 $ 452,764

1 The weighted average interest rate used to capitalize interest was 4.1 per cent at March 31, 2020 (2019 - 4.1 per cent).


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3333.. CCoonnssoolliiddaatteedd ssttaatteemmeenntt ooff ccaasshh fflloowwss

aa)) AAddjjuussttmmeennttss ttoo rreeccoonncciillee nneett eeaarrnniinnggss ttoo ccaasshh ffrroomm ooppeerraattiinngg aaccttiivviittiieess (thousands of dollars) Note 2020 2019 Adjustments to reconcile net earnings to cash from operating activities Depreciation and amortization 29 $ 927,607 $ 881,206 Share of net earnings from equity accounted investees 12 (5,252) (8,660) Defined benefit plan current service costs 23 6,234 7,969 Provision for decommissioning and environmental remediation liabilities 19 1,919 36,020 Unrealized losses (gains) on der ivative f inancial instruments 8(b) 31,638 (14,074) Inventory recover ies 9 (3,800) (16,016) Loss on disposal of property, plant and equipment 47,146 17,429 Impairment losses 30 22,669 10,237 Net finance expenses 32 500,990 452,764 Reclassif ication of natural gas hedge transitional mark et value losses (29,857) (25,546) Other non-cash items 18,180 (22,285) $ 1,517,474 $ 1,319,044



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3333.. CCoonnssoolliiddaatteedd ssttaatteemmeenntt ooff ccaasshh fflloowwss (continued)

bb)) RReeccoonncciilliiaattiioonn ooff cchhaannggeess iinn lliiaabbiilliittiieess ttoo ccaasshh fflloowwss aarriissiinngg ffrroomm ffiinnaanncciinngg aaccttiivviittiieess (thousands of dollars)

Sinking Notes Long-term Lease

funds payable debt liabilities Other1 Total

Balance as of April 1, 2018 $ 935,587 $ (1,563,495) $ (7,853,274) $ (1,130,427) $ (42,712) $ (9,654,321) Changes from financing cash f lows: Decrease in notes payable - 93,309 - - - 93,309 (Increase) decrease in other liabilities - - - (10,002) 10,051 49 Debt proceeds from the GRF - - (597,090) - - (597,090) Debt repayments to the GRF - - 50,000 - - 50,000 Debt repayments to other lenders - - 76,080 21,622 - 97,702 Sink ing fund installments 80,501 - - - - 80,501

Total changes from financing cash flows $ 80,501 $ 93,309 $ (471,010) $ 11,620 $ 10,051 $ (275,529) Other changes: Changes in fair value 24,483 - - - - 24,483 Interest income (expense) 24,260 (15,744) (278,611) (165,460) - (435,555) Interest paid - 16,617 273,561 165,464 - 455,642 Other - (873) 4,245 (1,555) (3,327) (1,510) Total other changes $ 48,743 $ - $ (805) $ (1,551) $ (3,327) $ 43,060 Balance as of March 31, 2019 $1,064,831 $ (1,470,186) $ (8,325,089) $ (1,120,358) $ (35,988) $ (9,886,790)

IFRS 16 adjustment - - - (85,756) - (85,756) Balance as of April 1, 2019 $1,064,831 $ (1,470,186) $ (8,325,089) $ (1,206,114) $ (35,988) $ (9,972,546)

Changes from financing cash f lows: Decrease in notes payable - 20,613 - - - 20,613 (Increase) decrease in other liabilities - - - 96,221 2,263 98,484 Pr incipal repayments of lease liabilities - - - 37,926 - 37,926 Debt proceeds from the GRF - - (671,340) - - (671,340) Debt repayments to the GRF - - 42,593 - - 42,593 Debt proceeds from other lenders - - (42,209) - - (42,209) Debt repayments to other lenders - - 110,053 - - 110,053 Sink ing fund installments 86,133 - - - - 86,133 Sink ing fund redemptions (10,212) - - - - (10,212)

Total changes from financing cash flows $ 75,921 $ 20,613 $ (560,903) $ 134,147 $ 2,263 $ (327,959) Other changes: Changes in fair value 24,304 - - - - 24,304 Capitalized borrowing costs - - 25,442 - - 25,442 Interest income (expense) 28,960 (12,862) (299,450) (154,591) - (437,943) Interest paid - 15,083 287,169 154,769 - 457,021 Other 4,296 (2,221) (19,802) (15,663) (2,073) (35,463) Total other changes $ 57,560 $ - $ (6,641) $ (15,485) $ (2,073) $ 33,361 Balance as of March 31, 2020 $1,198,312 $ (1,449,573) $ (8,892,633) $ (1,087,452) $ (35,798) $ (10,267,144)

1Other includes other liabilities and bond forward agreements.


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3344.. RReellaatteedd ppaarrttyy ttrraannssaaccttiioonnss

Included in these consolidated financial statements are transactions with var ious Sask atchewan Crown corporations, ministr ies, agencies, boards and commissions related to the Corporation by virtue of common control by the Government of Sask atchewan and non-Crown corporations and enterpr ises subject to joint control and significant influence by the Government of Sask atchewan (collectively referred to as “ related parties” ). The Corporation has elected to tak e a partial exemption under IAS 24, Related Par ty Disclosures which allows government-related entities to limit the extent of disclosures about related party transactions with government or other government-related entities. These transactions are in the normal course of operations and are recorded at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

In addition, the Corporation pays Sask atchewan provincial sales tax to the Sask atchewan Ministry of Finance on all its taxable purchases. Taxes paid are recorded as part of the cost of these purchases. Other transactions and amounts due to and from related parties and the terms of settlement are descr ibed separately in these consolidated financial statements and the notes thereto. KKeeyy mmaannaaggeemmeenntt ppeerrssoonnnneell ccoommppeennssaattiioonn In addition to salar ies, the Corporation provides non-cash benefits to k ey management personnel, defined as the Board of Directors of each of its subsidiar ies, as well as the President and V ice Presidents of CIC and each of its subsidiar ies.

K ey management personnel compensation consists of (thousands of dollars):

2020 2019 Salaries, wages and short-term employee benefits $ 20,533 $ 20,202 Employee future benefits 952 1,019 Termination benefits 53 234 Other 7 7 $ 21,545 $ 21,462

3355.. CCoommppaarraattiivvee iinnffoorrmmaattiioonn Certain of the March 31, 2019 information has been reclassif ied to conform to the current year ’s presentation.

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At the end of 2019-20, losses on disposal of property, plant and equipment were reclassif ied from an accumulated depreciation deferral account to a loss account in the Consolidated Statement of Comprehensive Income to more accurately reflect the nature of the balances. This resulted in an adjustment of $19.3 million to the April 1, 2018, property, plant and equipment accumulated depreciation and retained earnings balances.

In 2019-20, CIC sponsored a primary school class from a Regina inner city school to tour

the Saskatchewan Science Centre, enjoy an IMAX movie, and ignite their scientific curiosity!

CIC’s support provides the opportunity to promote science and innovation to children

and youth in our community who may not otherwise get the experience.

Documents

CIC Consolidated - cicorp.sk.capub/2019-20_CIC_AR_Consolidated.pdf · CIC CONSOLIDATED CIC Consolidated Management . Discussion & Analysis. ... Above: SaskEnergy Customer Solutions